YouTube, the popular video sharing service owned by Google, will be fined a record $170 million by the Federal Trade Commission for illegally collecting personal information from children without the consent of their parents. The $170 million fine is the most ever charged for violating the Children’s Online Privacy Protection Act (COPPA) Rule, which imposes certain requirements on the operators of websites that are directed at children under 13 years old that knowingly collect their personal information.
The FTC and the New York Attorney General say YouTube violated the rule by collecting personal internet usage information from viewers of child-directed channels to deliver targeted ads to viewers of these videos—many of whom were children—without notifying parents of doing so.
In deals with prospective corporate clients, YouTube “touted its popularity with children” as part of its sales pitch, despite that certain individual channels are child-directed and therefore must comply with COPPA.
Here’s how it works: YouTube allows Google account holders to create video channels that display their content, with the option to monetize their channel by allowing YouTube to advertise to viewers with ads based on the viewer’s search history. This generates revenue for the channel owners and YouTube.
YouTube knew they were doing this, according to the FTC filing. Many channel owners told YouTube and Google that their material was directed toward children, and on occasion YouTube’s content rating system automatically identified that the content was directed toward children. Regardless, they still advertised on these channels; YouTube allegedly told one advertising company it did not have users younger than 13 on its platform, and therefore they did not need to comply with COPPA. Additionally, YouTube told toy-maker Mattel that they were “today’s leader in reaching children age 6-11 against top TV channels,” and told Hasbro, another toy maker, that YouTube is the “#1 website regularly visited by kids.”
Aside from the fine, the FTC will also require Google and YouTube to develop, implement, and maintain a system to allow channel owners to identify which of their content is directed toward children so they can ensure they’re complying with COPPA.
From a data privacy perspective, the key takeaway of this story should be that there’s no getting around privacy rules—and the fines for companies that violate them are steep, given the record-scope of Google’s YouTube fine. The fine amounted to 1.7% of Google’s profit in its most recent quarter; the top fine for the UK’s Global Data Privacy Regulation (GDPR) can be as high as 4% of annual revenue. The soon-to-launch California Consumer Privacy Act (CCPA) will have fines that cap at $7,500 per violation, but the bigger concern for many companies will be ensuring their data privacy compliance is in order heading into January, 2020.
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Information in this blog was taken from the FTC's Press Release.