Google's YouTube to pay $170 million penalty for collecting data on kids
Google's YouTube to pay $170
million penalty for collecting data on kids
WASHINGTON (Reuters) - Google, which is owned by Alphabet Inc,
and its YouTube video service will pay $170 million to settle allegations that
it broke federal law by collecting personal information about children, the
Federal Trade Commission said on Wednesday.
YouTube had been accused of tracking viewers of children’s channels using
cookies without parental consent and using those cookies to target millions of
dollars in advertisements to those viewers.
The settlement with the FTC and the New
York attorney general’s office, which will receive $34 million, is the largest
since a law banning collecting information about children under age 13 came
into effect in 1998. The law was revised in 2013 to include “cookies,” used to
track a person’s internet viewing habits.
It is also small compared with the
company’s revenues. Alphabet, which generates about 85% of its revenue from
sales of ad space and ad technology, in July reported total second-quarter
revenue of $38.9 billion.
YouTube said in a statement on Wednesday
that in four months it would begin treating all data collected from people
watching children’s content as if it came from a child. “This means that we
will limit data collection and use on videos made for kids only to what is
needed to support the operation of the service,” YouTube said on its blog.
In addition to the monetary fine, the
proposed settlement requires the company to create a system for identifying
content aimed at children and to notify channel owners about their obligations
to get consent from parents before collecting information on children.
FTC Chairman Joe Simons noted at a news
conference on Wednesday what he said were important changes to YouTube business
practices. “No other company in America is subject to these types of
requirements and they will impose significant costs on YouTube,” he told
reporters.
FTC’s Bureau of Consumer Protection
director Andrew Smith told reporters that the $170 million settlement was based
on revenues from data collected, times a multiplier. “It happens that $170
million is roughly the budget of the Bureau of Consumer Protection for one
year,” he added.
Once the settlement takes effect, the
FTC plans to “conduct a sweep of the YouTube platform to determine whether
there remains child-directed content” in which personal information is being
collected, Smith said.
The FTC could take actions against
individual content creators or channel owners as a result.
In late August, YouTube announced it
would launch YouTube Kids with separate niches for children depending on their
ages and designed to exclude disturbing videos. It has no behavioral
advertising.
YouTube allows companies to create
channels, which include advertisements that create revenue for both the company
and YouTube.
In its complaint, the government said
that YouTube touted its popularity with children in marketing itself to
companies like Mattel and Hasbro. It told Mattel that “YouTube is today’s
leader in reaching children age 6-11 against top TV channels,” according to the
complaint.
New York Attorney General Letitia James
said the companies “abused their power.”
“Google and YouTube knowingly and
illegally monitored, tracked, and served targeted ads to young children just to
keep advertising dollars rolling in,” said James.
The two Democrats on the FTC, Rebecca
Slaughter and Rohit Chopra, dissented from the settlement. Slaughter, who
called the violations “widespread and brazen,” said the settlement fails to
require YouTube to police channels that provide children’s content but do not
designate it as such, thus allowing more lucrative behavioral advertising, which
relies on tracking viewers through cookies.Senators Ed
Markey and Richard Blumenthal, both Democrats active in online privacy matters,
criticized the settlement in separate statements.
“A financial settlement is no substitute
for strict reforms that will stop Google and other tech companies from invading
our privacy,” Blumenthal said. “I continue to be alarmed by Big Tech’s policies
and practices that invade children’s lives.”
Reporting
by Diane Bartz; Additional reporting by David Shepardson; Editing by Nick
Zieminski and Marguerita Choy
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