Here’s why the FTC slapped Youtube with $170M fine and what it means to your child’s privacy

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The Federal Trade Commission wants Google, which owns the popular video streaming platform, Youtube, to change their policy on how they handle the information of children they collect from the platform. In a settlement proposal, the company and its subsidiary will pay a record $170 million in fine to the Federal Trade Commission over the alleged violations of the privacy rights of children by collecting their data without the permission of their parents.

The fine, according to the FTC, is meant to settle the allegation against the company and its subsidiary. Of the $170 million fine, Google and Youtube would pay the FTC a total of $136 million, and the remaining amount of $134 million will be paid to New York City for violations of the Children’s Online Privacy Protection Act (COPPA) Rule

The FTC said that the $136 million that would be collected from Google and Youtube is the largest fine that the agency has slapped to a company for violations of the COPPA Rule since it was legislated in 1998 in the Congress. 

Youtube and its mother company, Google, allegedly violated the COPPA Rule by illegally collecting personal information from viewers of child-directed channels and its failure to notify the parents of the children of the activity and without securing their consent to the collection of data. According to the FTC and the Attorney General’s complaint, the information collected by the company from children come in the form of “persistent identifiers that are used to track users across the Internet.”

The regulatory body argued that Youtube is monetizing the information they are collecting from children by using the said identifiers – more commonly known as cookies – in order to serve targeted advertising to the children’s accounts. 

Cookies are commonly used by websites and online platforms in order to collect information relating to the users’ Internet browsing behavior and track users. The collected information will then be used by the website to serve relevant advertising to an account based on the previous website they visited, the latest items they bought online, and some other information obtained through more invasive cookies like messages. 

The COPPA Rule requires child-directed websites and services to disclose their information practices fully and to secure parental consent before they start collecting information from users below 13 years-old. This rule also includes the use of cookies to collect information from the child’s account. 

The complaint further argues that services like ad networks are also subject to the COPPA Rule because these services have direct knowledge that they are collecting information from child-directed websites and online platforms like Youtube. 

“YouTube touted its popularity with children to prospective corporate clients,” said FTC Chairman Joe Simons. “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.”

The complaint notes that Youtube and Google know that there contents on their website that is directed towards children. In fact, they have a system that tags content if they are child-directed like Toy manufacturers, for example. Thus, the FTC argues that it is the responsibility of the video streaming platform to inform their users that some channels are subject to COPPA Rules if they are directed towards children. 

Moving forward, aside from the fine, the FTC requires Youtube “to develop, implement, and maintain a system that permits channel owners to identify their child-directed content on the YouTube platform so that YouTube can ensure it is complying with COPPA.” 

Furthermore, the FTC wants the streaming platform to notify its channel owners that their child-directed contents are subject to COPPA Rules. The FTC also wants Youtube to provide annual training on how to be compliant with the regulation, especially their employees who handle channels that are child-directed. 

The FTC voted 3-2 to authorize the complaint and agree on the settlement. Two commissioners have dissented saying that the litigation is a better remedy to the situation. However, the supporting votes argued that by accepting the settlement will immediately change Youtube and Google’s policies rather than fighting the matter in court for years, which delays the implementation of the new policy. 

“We believe the significant monetary penalty, coupled with the far-reaching conduct relief, is almost certainly better than what we would achieve in litigation. Importantly, the relief for consumers is immediate, rather than after years of litigation,” said Chairman Simons and Commissioner Christine S. Wilson in a joint statement. 

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