Regulators Fine Google $170 Million for Violating Children’s Privacy on YouTube

Google on Wednesday agreed to pay a record $170 million fine and
to make changes to protect children’s privacy on YouTube, as
regulators said the video site had knowingly and illegally
harvested personal information from youngsters and used that data
to profit by targeting them with ads.

The measures were part of a settlement with the Federal Trade
Commission and New York’s attorney general. They said YouTube had
violated a federal children’s privacy law known as the Children’s
Online Privacy Protection Act, or COPPA.

Regulators said YouTube, which is owned by Google, had illegally
gathered children’s data — such as identification codes that are
used to track web browsing over time — without their parents’
consent. The site also marketed itself as a top destination for
young children to advertisers, even as it told some advertising
companies that no compliance with the children’s privacy law was
needed because it did not have viewers younger than 13. YouTube
then made millions of dollars by using the information harvested
from children to target them with ads, regulators said.

To settle the charges, YouTube agreed to pay $170 million, of
which $136 million will go to the F.T.C. and $34 million to New
York. The sum represents the largest civil penalty ever obtained by
the F.T.C. in a children’s privacy case, dwarfing the previous
record fine of $5.7 million that the agency levied this year
against the owner of TikTok, a social video-sharing app.

Under the settlement, which the F.T.C. approved in a 3 to 2
vote, YouTube also agreed to set up a system that asks video
channel owners to identify the children’s content they post so that
targeted ads are not placed in those videos. YouTube must also
obtain consent from parents before collecting or sharing personal
details like their child’s name or photos, regulators said.

The move adds to the enforcement actions that American
regulators have recently taken against tech companies for
violations of people’s privacy, indicating the Trump
administration’s willingness to aggressively pursue the powerful
corporations. It follows a $5 billion privacy settlement between
the F.T.C. and Facebook in July over how the social network
collected and handled its users’ data.

But critics warned that the fine and measures against YouTube
did not go far enough to protect children’s privacy.

Children’s advocates said the $170 million penalty was a slap on
the wrist for one of the world’s richest companies. They added that
Google had simply agreed to abide by a children’s privacy law that
it was already obligated to comply with. COPPA prohibits operators
of online services from collecting personal data, like home
addresses, from children under 13 without a parent’s verifiable
permission.

“Merely requiring Google to follow the law, that’s a meaningless
sanction,” said Jeffrey Chester, executive director of the Center
for Digital Democracy, a nonprofit whose efforts in the 1990s
helped trigger COPPA’s passage. “It’s the equivalent of a cop
pulling somebody over for speeding at 110 miles an hour — and they
get off with a warning.”

The agreement split the F.T.C. down partisan lines, with the
agency’s three Republican commissioners voting to approve the
settlement and the two Democratic commissioners dissenting.

In a statement, two of the Republican commissioners, Joseph J.
Simons, the agency’s chairman, and Christine S. Wilson, said that
the settlement “achieves a significant victory for the millions of
parents whose children watch child-directed content on YouTube.” In
particular, they said, this was the first time a platform would
have to ask its content producers to identify themselves as
creators of children’s material. The settlement, they said, “sends
a strong message to children’s content providers and to platforms
about their obligation to comply with the COPPA rule.”

But while the agreement prohibits YouTube and Google from using
or sharing the children’s data they have already obtained, one of
the Democratic commissioners, Rohit Chopra, said it did not hold
company executives personally accountable for illegal data-mining
of children. The other Democratic commissioner, Rebecca Kelly
Slaughter, said the agreement did not go far enough by requiring
YouTube itself to proactively identify children’s videos on its
platform.

“No individual accountability, insufficient remedies to address
the company’s financial incentives, and a fine that still allows
the company to profit from its lawbreaking,” Mr. Chopra wrote in
his dissent. “The terms of the settlement were not even significant
enough to make Google issue a warning to its investors.”

COPPA is the strongest federal consumer privacy statute in the
United States, enabling the F.T.C. to level fines of up to $42,530
for each violation.

Noah Phillips, a Republican commissioner, argued that Congress
should give the F.T.C. more guidance about how to levy fines.

In a blog post on Wednesday about the settlement, YouTube’s
chief executive, Susan Wojcicki, said that “nothing is more
important than protecting kids and their privacy.” She added, “From
its earliest days, YouTube has been a site for people over 13, but
with a boom in family content and the rise of shared devices, the
likelihood of children watching without supervision has
increased.”

YouTube said that not only had it agreed to stop placing
targeted ads on children’s videos, it would also stop gathering
personal data about anyone who watches those videos, even if the
company believes the viewer is an adult. It said it would also
eliminate other features on children’s videos, such as comments and
notifications, that require the use of personal data.

Ms. Wojcicki said YouTube also plans to use artificial
intelligence to scan for content that targets young audiences, like
videos featuring kids’ toys, games or characters, in addition to
relying on creator reports.

Under the settlement, YouTube must implement the changes by
early next year.

The privacy case against YouTube began in 2016 after the New
York attorney general’s office, which has been active in enforcing
the federal children’s privacy law in the state, notified the
F.T.C. of apparent children’s privacy violations on the video
site.

“Google and YouTube knowingly and illegally monitored, tracked
and served targeted ads to young children just to keep advertising
dollars rolling in,” Letitia James, New York’s attorney general,
said in a statement on Wednesday. “These companies put children at
risk and abused their power.”

Google has repeatedly dealt with privacy violations in recent
years. The internet search company is subject to a 20-year federal
consent order from 2011 for deceptive data-mining involving its
now-defunct social network Buzz. That order required Google to put
a comprehensive privacy program in place and forbade it from
misrepresenting how it handles people’s data.

In 2012, Google also agreed to pay $22.5 million to settle
F.T.C. charges that it had violated that consent order by deceiving
users of Apple’s Safari browser about its data-mining
practices.

The Silicon Valley company is also the subject of a state
lawsuit over alleged children’s privacy violations, brought by
Hector Balderas, the attorney general of New Mexico. The suit
alleges the company failed to ensure that children’s apps in its
Google Play store complied with the children’s privacy law. Google
has asked that the case be dismissed.

The settlement on Wednesday is likely to have implications
beyond YouTube. The changes required under the agreement could
limit how much video makers earn on the platform because they will
no longer be able to profit from targeted ads on children’s
videos.

To offset some of those losses, YouTube said it would funnel
$100 million to creators of children’s content over the next three
years. It will also heavily promote YouTube Kids, its child-focused
app, to shift parents away from using the main YouTube app when
allowing their kids to watch videos.

The crackdown on creators of children’s content could make it
financially difficult to produce videos for kids, said Maureen
Ohlhausen, a former acting chairwoman of the F.T.C.

“There is a lot of free content available for children,” she
said. “You want to be sure that you don’t kill the goose that lays
the golden egg.”

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