Photo/Reuters
By Margaret Harding McGill
Under a consent decree, YouTube will undertake a series of corrective actions.
The U.S. Federal Trade Commission and New York’s attorney general on Wednesday slapped a $170 million fine and other sanctions on Google-owned YouTube over its handling of children’s data, in the latest government crackdown on the tech industry’s business practices. The settlement resolves allegations that YouTube violated a federal children’s online privacy law by tracking kids under 13 years old without their parents’ consent, and serving targeted advertisements to them.
Under a consent decree, YouTube will require users to self-identify whether videos they upload are meant for children, obtain parental consent before collecting personal information about kids and provide its employees with annual training on how to comply with the children’s privacy law. Google and YouTube have also agreed to no longer use personal data previously collected from kids. YouTube will pay $34 million of the $170 million fine to New York.
“This settlement achieves a significant victory for the millions of parents whose children watch child-directed content on YouTube,” Republican FTC Chairman Joe Simons and fellow GOP Commissioner Christine Wilson said in a joint statement. “It also sends a strong message to children’s content providers and to platforms.”
POLITICO reported last week the fine would range between $150 million and $200 million.
The penalties are the latest sign of regulators’ increased scrutiny of Silicon Valley’s biggest companies. The FTC levied a $5 billion fine against Facebook in July following an investigation into the social media giant’s data practices. Facebook later revealed that the FTC has opened an antitrust investigation into the company, and the Justice Department announced its own broad review of the tech industry’s impact on competition.
In a blog post, YouTube CEO Susan Wojcicki said in four months, the company will limit data collection on videos made for kids and stop serving personalized ads on the content. In addition to requiring users to identify videos geared toward children, the company will also use artificial intelligence to find videos that target minors, she said.
She noted the changes will have a “significant business impact” on creators of kids’ and family content who make money from behavioral advertising, and said YouTube will establish a $100 million fund to support “thoughtful, original” children’s content on its platforms.”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,” Wojcicki said.
A coalition of privacy groups complained to the FTC in April 2018 that YouTube violated the Children’s Online Privacy Protection Act by collecting personal information about minors and using it to target advertisements at them without getting consent from parents. The organizations argued the company knowingly targeted children, ignoring restrictions on the collection of personal information from users under 13. The children’s privacy law, known as COPPA, went into effect nearly two decades ago.
YouTube’s terms of service state it is not intended for children. But the New York attorney general’s office said it discovered that a “well-known” YouTube channel operator repeatedly informed Google and YouTube that its videos were directed toward children under 13, according to a news release.
“Google and YouTube knowingly and illegally monitored, tracked, and served targeted ads to young children just to keep advertising dollars rolling in,” New York AG Letitia James, a Democrat, said in a statement. “These companies put children at risk and abused their power, which is why we are imposing major reforms to their practices and making them pay one of the largest settlements for a privacy matter in U.S. history.”
The $170 million fine on YouTube dwarfs the FTC’s previous record penalty of $5.7 million for a COPPA violation. But privacy groups last week criticized the idea of a fine in the $150 million to $200 million range as amounting to pocket change for a company the size of Google.
The FTC’s 3-2 vote was along party lines, with the Republican majority led by Simons voting for the settlement and the two Democratic members voting against it, in a repeat of the split commission vote over the Facebook penalty. The Democrats, Rohit Chopra and Rebecca Kelly Slaughter, have called for tougher restrictions for tech companies accused of privacy violations. Slaughter said the FTC should require a commitment from YouTube to police the identification of children’s videos, noting the incentive for some content creators to be less than accurate in order to continue getting revenue from behavioral advertising.
“YouTube profits off of behavioral advertising proportionally with its content creators; when behavioral advertisements are disabled, YouTube also takes a financial hit,” Slaughter said in her dissenting statement. “A cynical observer might wonder whether in the wake of this order YouTube will be even more inclined to turn a blind eye to inaccurate designations of child-directed content in order to maximize its profit.”
Chopra advocated for a higher financial penalty for YouTube. But Simons and Wilson, the two GOP commissioners, argued that the $170 million fine and the conduct changes required by the settlement are “almost certainly better” than what the agency could get through litigation.”We choose not to gamble the protection of children now in hopes of hitting a jackpot in the future,” the Republicans said in their statement.
YouTube’s treatment of kid-related content has come under increasing criticism, particularly after a New York Times report in June that found that the platform’s recommendation engine sexualizes children by surfacing videos of partially clothed kids to users who have previously sought out such content.
YouTube continues to face pressure in Congress, with lawmakers calling for a bevy of changes to the platform. Representatives David Cicilline (D-R.I.), head of the House antitrust subcommittee, and Jeff Fortenberry (R-Neb.) have urged the FTC to require that videos directed at children be moved off YouTube’s main platform and onto YouTube Kids, its dedicated service for kids’ content.
COPPA author Senator Ed Markey (D-Mass.) has also sought a series of privacy safeguards, including the deletion all data under Google’s control collected from children under 13 and a ban on Google launching any child-directed product or service until it has been reviewed and approved by an independent panel appointed by the FTC.
Source: Politico