YouTube will pay $ 170 million in FTC confidentiality settlement

Google-owned YouTube will pay a record $ 170 million to settle claims by the Federal Trade Commission and New York Attorney General that it made millions for illegally collecting personal information from children without parental consent. Shares of Google's parent company Alphabet increased by about 0.8% after the announcement.

The settlement, announced Wednesday, requires Google and YouTube to pay $ 1[ads1]36 million to the FTC and $ 34 million to New York for allegedly violating the Children's Online Privacy Protection Act (COPPA) rule. The $ 136 million penalty is the largest amount the FTC has ever achieved in a COPPA case since Congress passed the law in 1998, according to the agency. The measure was passed with 3-2 votes by the commissioners, who voted along the party lines.

"YouTube designated the popularity of children for potential business customers," wrote FTC Chairman Joe Simons, who voted for the settlement. "But when it came to complying with COPPA, the company refused to acknowledge that parts of their platform were clearly aimed at children. There is no excuse for YouTube's violation of the law."

The COPPA rule requires child-directed websites to disclose computer practices and obtain parental consent to collect information about children under 13 years of age. The complaint alleges YouTube collected personal information from "viewers of child-directed channels" without parental consent using cookies, which track user behavior across the Internet.

YouTube promoted Mattel and Hasbro as the number one "leader" when it comes to children ages 6-11, the warrant found. In one case, the company told an advertising company that it had no users younger than 13 on the platform and that channels on the platform did not have to comply with COPPA.

In addition to the penalty, the settlement requires Google and YouTube to "develop, implement, and maintain a system that allows channel owners to identify their child-directed content on the YouTube platform" so that YouTube can ensure it complies with COPPA. It also requires them to notify data collection practices and "obtain verifiable parental consent" before collecting personal information from children.

"For the third time since 2011, the Federal Trade Commission is sanctioning Google for privacy," FTC Commissioner Rohit Chopra said in a dissenting statement. "This latest violation is extremely serious. The company baits children who use nursery rhymes, comics and other child-directed content on curated YouTube channels to feed the hugely profitable behavioral advertising business."

Chopra said that with the Google settlement "the commission repeated many of the same mistakes from the defective Facebook settlement: no individual accountability, inadequate means to address the company's financial incentives and a fine that still allows the company to profit from the offense. The terms of the settlement weren't even significant enough to make Google give a warning to its investors. "

Chopra and Democratic Commissioner Rebecca Kelly Slaughter had both voted against the FTC's previous $ 5 billion settlement with Facebook, ending a probe in its data practice. Like the Facebook settlement, both argued that the Google agreement does not go far enough to curb what they describe as malicious practices.

"When it comes to fencing relief, the current order looks like a fence, but one with only three sides," Slaughter wrote in a dissenting statement. "The missing fourth page is a mechanism for ensuring that content creators tell the truth when they designate content that is not child-made. And such a mechanism is certainly within YouTube's powerful technological capabilities."

Settlement is the latest move by regulators to crack down on privacy breaches by major technology companies, including the recent settlement with Facebook. The Department of Justice and US Attorney William Barr have also announced antitrust probes, which allegedly include Google.

It also comes as the company struggles with criticism for disinformation and violent content. Last week, CEO Susan Wojcicki doubled keeping YouTube "open" to the belief that it does more good than bad for the community.

Prior to the fines, YouTube made some adjustments to its platform, including changing algorithms and quitting targeted ads.

The FTC will host a press conference in Washington, DC at 11 am Eastern Time to discuss the settlement.

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