YouTube must pay $170 million to settle charges that it violated a federal law prohibiting companies from collecting personal information from children without parental consent.
The confirmation Wednesday of the Google-owned video-sharing site’s settlement with the Federal Trade Commission and the New York attorney general comes after numerous reports that a deal had been reached.
“YouTube touted its popularity with children to prospective corporate clients,” FTC Chairman Joe Simons said in a statement. “Yet when it came to complying with COPPA, the company refused to acknowledge that portions of its platform were clearly directed to kids.”
The $136 million penalty YouTube must pay to the FTC is the largest amount the agency has ever obtained in such a case since Congress enacted the Children’s Online Privacy Protection Act in 1998. The San Bruno-based company also must pay $34 million to the New York AG.
In addition, YouTube must ensure that children’s content on its platform is complying with COPPA. The deal calls for content providers to designate when their videos are meant for children, then YouTube is supposed to determine whether they’re COPPA-compliant.
Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said during a Wednesday news conference in Washington that the settlement greatly affects YouTube’s business model.
“We’re holding a platform liable for content posted by someone else,” he said. “That’s a really big deal.”
In a blog post Wednesday acknowledging the settlement, YouTube CEO Susan Wojcicki said her company is “committed to getting it right,” and that it will limit the information it collects and stop serving personalized ads on children’s videos.
The FTC voted 3-2 along party lines to approve the settlement, as it did when it penalized Facebook $5 billion for privacy violations in a deal announced last month. While Simons called the YouTube settlement groundbreaking, the two Democratic commissioners said it was not enough.
Commissioner Rohit Chopra pointed out that this is the third time the FTC has sanctioned Google over privacy violations since 2011.
He also said smaller companies pay “dearly” for COPPA violations and their executives are held accountable. “Here, where a dominant incumbent engaged in widespread violations, the company is paying a slice of their profits from wrongdoing and executives avoid scrutiny,” Chopra wrote in his dissent.
Democratic Commissioner Rebecca Slaughter said the settlement doesn’t require YouTube to police the channels that don’t designate their content properly.
“The current order looks like a fence but one with only three sides,” she wrote in her dissent. “The missing fourth side is a mechanism to ensure that content creators are telling the truth when they designate their content as not child-directed.”
Wojcicki said YouTube will use machine learning to try to detect children’s content.
New York Attorney General Letitia James said in a news release Wednesday that Google and YouTube “put children at risk and abused their power.” She noted that the companies have been ordered not to use previously collected information.
Advocacy groups that filed the petition to ask the FTC to investigate YouTube also called the amount of the fine inadequate.
“A paltry financial penalty of $170 million — from a company that earned nearly $137 billion in 2018 alone — sends a signal that if you are a politically powerful corporation, you do not have to fear any serious financial consequences when you break the law,” said Jeff Chester, executive director of the Center for Digital Democracy, in a statement. Google’s 2018 revenue was $136.8 billion.
Meanwhile, the author of COPPA slammed the settlement, saying that the FTC stands for “forgetting teens and children.”
“Not a single Google executive or investor will bat an eye as a result of this toothless decision,” said Sen. Ed Markey, D-Massachusetts, in a statement Wednesday.
