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Google’s YouTube to Pay $170 Million to Settle FTC Charge It Collected Kids’ Data Illegally

Google and YouTube will pay $170 million to settle allegations by the Federal Trade Commission and the New York Attorney General that YouTube illegally collected personal information from children, the FTC announced.

The fine is a record in a case related to alleged violations of the Children’s Online Privacy Protection Act (COPPA), according to the FTC. But it’s just a drop in the bucket for Google — whose parent company Alphabet generated nearly $10 billion in net income in the second quarter.

Under the terms of the settlement, YouTube by the end of 2019 will implement a series of changes for how kids’ content is treated on the platform — to stop collecting data and serving targeted ads on such videos, regardless of the age of the actual viewer.

“YouTube touted its popularity with children to prospective corporate clients,” FTC Chairman Joe Simons said in announcing the settlement. “Yet when it came to complying with COPPA, 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 July 2018, a coalition of 23 advocacy groups alleged in a complaint with the FTC that YouTube for years illegally collected data on children’s video viewing.

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Under the settlement, YouTube is required to develop and maintain a system that lets channel owners identify “child-directed content” so that YouTube can ensure it complies with COPPA. In addition, Google and YouTube must notify channel owners that their child-directed content may be subject to COPPA’s obligations and provide annual training about complying with COPPA for employees who deal with YouTube channel owners.

YouTube CEO Susan Wojcicki, in a blog post, said that starting in four months, YouTube will treat data from “anyone watching children’s content on YouTube as coming from a child, regardless of the age of the user.” YouTube will also stop serving personalized ads on this content entirely, and it will disable certain features on this type of content, like comments and notifications.

The changes will be implemented within four months to give family and kids creators “who have been building both wonderful content and thriving businesses” time to adjust, according to Wojcicki. “We recognize this won’t be easy for some creators and are committed to working with them through this transition and providing resources to help them better understand these changes,” she wrote. YouTube, under the regulatory settlement, is required to implement the changes by early 2020.

To help offset lost ad revenue for YouTube kid-oriented channels, YouTube also is establishing a $100 million fund, to be distributed over three years, dedicated to the creation of “thoughtful, original children’s content on YouTube and YouTube Kids globally,” Wojcicki wrote.

Additionally, under the terms of the regulatory settlement, Wojcicki said YouTube is introducing new, mandatory annual training for teams about its requirements related to children’s usage of YouTube. “We continue to recommend parents use YouTube Kids if they plan to allow kids under 13 to watch independently,” Wojcicki added.

The FTC’s vote to approve the YouTube settlement over alleged COPPA violations broke along party lines, with the agency’s three Republican commissioners voting for it and the two Democrat appointees opposing it. FTC commissioner Rohit Chopra, one of the Democrats, argued that the provisions of the settlement were insufficient and noted that the $170 million fine wasn’t even significant enough to prompt Google to issue a warning to investors.

“Financial penalties need to be meaningful or they will not deter misconduct,” Chopra wrote in a statement on the Google/YouTube settlement. He added that YouTube’s proposal that creators be required to flag whether content is aimed at kids “may have the perverse effect of allowing Google to pin the blame on content creators” for COPPA violations. “Absent an enforceable commitment from Google that it will fundamentally change its business practices to ensure that child-directed content is not subject to impermissible data harvesting, children will still be at risk.”

The settlement requires Google and YouTube to pay $136 million to the FTC and $34 million to New York State.

Previously, the biggest FTC fine in a case alleging COPPA violations came earlier this year in a $5.7 million fine against TikTok, the short-form video app owned by China’s Bytedance, over allegations that predecessor app Musical.ly violated the law by failing to get parental consent for users who were under 13.

Kids’ content on YouTube is hugely popular. A study by the Pew Research Center released last month, analyzing English-language YouTube videos from the platform’s largest channels during the first week of January 2019, found that videos featuring a children who appeared to be under the age of 13 received nearly three times as many views on average as other types of videos.

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