FTC Fines Google $170 Million for Violating Children’s Privacy

The Federal Trade Commission has slapped Google with a $170 million fine to settle allegations of Google-owned video sharing service YouTube collecting the personal information of children without obtaining consent from their parents. The settlement, announced Wednesday, requires Google and YouTube to pay $136 million to the FTC and another $34 million to the state of New York over allegedly violating the Children’s Online Privacy Protection Act (COPPA), which protects those under age 13 from having their personal information collected without parental consent. The fine stemmed from a 2016 complaint brought by the New York attorney general’s office that YouTube used behaviorally targeted advertising on content intended for children. The site has in the past repeatedly marketed its kids content, branding itself as the "New Saturday Morning Cartoons" in presentations to toy companies while collecting information from viewers for the purposes of targeted advertising. The settlement represents the largest-ever fine the FTC has obtained in a case that hinged on COPPA, which has been in place since 1998. In a press conference Wednesday, FTC chairman Joe Simon said the settlement was 30 times larger than its $5.7 million fine against TikTok, which previously held the record as the largest COPPA civil penalty brought by the FTC. “A penalty of this magnitude sends a strong signal about the importance of children's privacy,” Simon told reporters Wednesday. At the same time, though, the settlement represents only a tiny fraction of what Google rakes in every quarter, primarily from targeted advertising. The company in July reported $38.94 billion in revenue in its most recent quarter, according to government filings. As part of the settlement, YouTube will be required to create and maintain a system that allows channel owners to identify child-directed content, which the FTC said will help YouTube ensure it is compliant with COPPA and the FTC order. YouTube will also be required to conduct annual compliance training for staff who deal with kids content. The company is also prohibited from using any of the data it previously collected on children for any purpose, including ones that would have otherwise been permissible under COPPA. No new rules for YouTube publishers There are no requirements from the FTC that Google must review content that might be mislabeled by channel owners. Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said the agency ultimately decided against writing in a requirement to review potentially mislabeled content because it would be “unenforceable.” Google, without going into specifics, has said it will use machine learning to review content. That lack of requirement was one that Democratic commissioner Rebecca Kelly Slaughter took issue with in her dissent on the settlement. “The order does not require YouTube to police the channels that deceive by misdesignating their content, such as by requiring YouTube to put in place a technological backstop to identify undesignated child-directed content and turn off behavioral advertising,” Slaughter wrote in her dissent. “True, a technological backstop is not explicitly mandated by COPPA’s text, but such a requirement would, I believe, be appropriate and necessary fencing-in relief.” As has become somewhat commonplace for the FTC, the approval of the settlement fell along party lines. Slaughter and fellow Democratic FTC commissioner Rohit Chopra dissented, while Republican commissioners Christine Wilson and Noah Joshua Phillips, along with Simon, approved. Google has until early next year to comply with the FTC order. After that, the agency will begin conducting a sweep of the YouTube platform to see whether the platform and its channels are in compliance. Smith said the ins and outs of that sweep won’t be made public. In advance of the settlement, Google has already made some changes to its handling of children’s content. Most notably, the company last week rolled out YouTube Kids, a separate ad-supported website that includes some parental controls. Smith and Simon said the settlement would send a signal to platforms that host children’s content and their creators, both of whom could face fines and penalties for collecting kids’ information without parental consent. “Would that it were the only battle and that everybody gets the message,” Smith said. “From our perspective, we are not going to be resting on our laurels. This is a new front in the COPPA enforcement world.”