YouTube Agrees To Pay $170M Fine For Children’s Privacy Violations; FTC Says Settlement “Game Changing” For Online Platforms – Update

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UPDATED with more details: Google will pay $170 million to settle claims by the Federal Trade Commission anda New York Attorney General Letitia James that YouTube illegally collected personal information from children without their parent’s consent.

The record fine, which had been anticipated after news reports that Google was about to settle the case, has ramifications across all platforms, as so much of kids’ viewing habits have shifted to online devices. Parental and consumer groups had called on the FTC to investigate what they saw as flagrant violations of a 1998 law that restricts the online collection of information from kids under the age of 13 without parental consent.

According to the FTC, Google and YouTube will pay $136 million to the agency, and $34 million to New York. The federal regulators said that the fine was the largest the FTC had ever collected for violations of the Children’s Online Privacy Protection Act, but also that it marked a turning point in enforcement.

Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said that this was the first time that the agency had found “a platform liable for content posted by someone else. That is a really big deal. This is game changing.”

In the complaint, the FTC and the New York Attorney General’s office claimed that YouTube violated the law by collecting tracking information from viewers of YouTube channels directed at children, and then earned “millions of dollars” by using the “cookies” to target ads to those channels’ viewers.

The law requires disclosure of their tracking practices and parental consent.

FTC chairman Joe Simons said that YouTube “touted its popularity with children to prospective corporate clients. Yet when it came to complying with [the children’s privacy act], the company refused to acknowledge that portions of its platform were clearly directed to kids. There’s no excuse for YouTube’s violations of the law.”

In a press conference, Simons and Smith touted the unprecedented nature of the fine, but also spoke of the challenge of holding YouTube liable. The agency had to show that the platform had “actual knowledge” that content posted to its site was directed at children and subject to the privacy law.

In a blog post, YouTube CEO Susan Wojcicki said that it will make a series of changes on its platform. In four months, the company said it will “treat data from anyone watching children’s content on YouTube as coming from a child, regardless of the age of the user.”

“This means that we will limit data collection and use on videos made for kids only to what is needed to support the operation of the service,” she wrote. “We will also stop serving personalized ads on this content entirely, and some features will no longer be available on this type of content, like comments and notifications.”

She also said that they will be using “machine learning” to find videos that target young audiences, including those that “have an emphasis on kids characters, themes, toys or games.”

According to the FTC, Google sent contradictory messages over the audiences for YouTube content, It claimed that it was a general audience site, and even told one advertising company that it did not have to comply with the children’s privacy law because it did not have users younger than 13 on its platform, according to the agency. But the agency noted that YouTube also marketed itself to toy makers as a popular destination for kids, even promoting that it was a new Saturday morning destination for those young viewers. It told Mattel and Hasbro that it was a leader in reaching children aged 6-11, the agency said.

“You can’t market your ability to get child viewers on the one hand. and disavow knowledge on the other,” Smith said.

The settlement also requires that Google and YouTube notify channel owners when their content may be subject to the children’s privacy law, and mandates compliance training for certain YouTube employees. It also requires that the platform maintain a system for YouTube channel owners to identify their children’s content on the platform, flagging it for compliance with the law.

The settlement must be approved by a federal judge.

The commission voted 3-2 to approve the settlement. Commissioners Rebecca Kelly Slaughter and Rohit Chopra voted against the action because they did not think it went far enough in sanctioning the company.

Two of the consumer groups that filed the complaint — the Campaign for a Commercial Free Childhood and the Center for Digital Democracy — said they were pleased with a provision in which Google and YouTube will ask their content creators to disclose if their videos are aimed at children. The thinking is that will help reduce the amount of “behavioral” advertising targeting young viewers.

But the groups expressed skepticism that the settlement will lead to substantive changes, as it does not specifically mandate that YouTube determine on its own whether the videos posted to its site are directed at kids. The burden of compliance will be with content creators, many of whom will face lower revenues if they shut down their targeted advertising capabilities, they said.

Jeff Chester, executive director of the Center for Digital Democracy, is calling for Congress to create a consumer watchdog to oversee online privacy practices.

“More fundamental changes will be required to ensure that YouTube is a safe and fair platform for young people,” he said.

The FTC’s Smith said that it considered mandating that YouTube implement a “machine learning” tool to identify children’s content, but ultimately decided that it posed enforcement problems and could evolve into a legal quagmire. YouTube’s announcement that it would take such an approach on its own is an indication that the company has an incentive “to police their platform,” he said.

YouTube also recently announced other changes, including the introduction of a desktop version of its YouTube Kids. They also announced a $100 million fund to invest in “thoughtful, original children’s content” over the next three years.

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