Children’s privacy costs just $170 million for Google in settlement with the FTC

The Federal Trade Commission has set a price on children’s privacy online and the going rate is $170 million.

That’s how much Google will have to pay under the terms of a settlement agreement to end investigations by the Federal Trade Commission and the New York Attorney General into YouTube’s alleged collection of children’s personal information without the consent of their parents.

YouTube has long had a problem with the way it treats children and their private information online. The settlement, which is a pittance, follows a complaint brought by the Federal Trade Commission and the New York Attorney General which accused the companies of violating the Children’s Online Privacy Protection Act (COPPA) Rule.

As a result of the settlement, Google and YouTube will pay $136 million to the FTC and $34 million to New York. It’s the largest amount the FTC has ever collected under a COPPA case, the FTC notes. Google will make the money back in less than a day (in fact, the FTC redacted a portion of the dissent from its Democratic commissioner that disclosed how much money YouTube makes from children’s advertising).

Needless to say, the advocates who were behind the complaints brought by the regulators were not impressed. 

“We are pleased that our advocacy has compelled the FTC to finally address YouTube’s longstanding COPPA violations and that there will be considerably less behavioral advertising targeted to children on the number one kids’ site in the world,” said Campaign for a Commercial Free Childhood Executive Director, Josh Golin. “But it’s extremely disappointing that the FTC isn’t requiring more substantive changes or doing more to hold Google accountable for harming children through years of illegal data collection. A plethora of parental concerns about YouTube – from inappropriate content and recommendations to excessive screen time – can all be traced to Google’s business model of using data to maximize watch time and ad revenue.”

The settlement brings to an end a year-long investigation triggered by the CCFC and other advocacy groups.

The complaint from the FTC and New York AG hinged on Google’s use of cookies from viewers of kids channels on YouTube that tracked those viewers across the internet without receiving the permission of parents first. 

Under COPPA rules, websites and online services targeting children need to disclose their data collection practices and receive consent from parents or guardians before they hoover up information for kids under 13… including the use of cookies. Third party networks also have to abide by the COPPA rules if they know that they’re using personal information of kids under 13.

“YouTube touted its popularity with children to prospective corporate clients,” said FTC Chairman Joe Simons, 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. There’s no excuse for YouTube’s violations of the law.”

YouTube was able to skirt the law by insisting that its users were not under 13 in its communications with advertisers despite pitching toymakers like Mattel and Hasbro that it was “today’s leader in reaching children age 6-11 against top TV channels”.

The settlement with YouTube and Google requires both companies to develop and maintain a system that lets channel owners identify the content that’s targeting children so it can ensure YouTube is complying with COPPA rules. The companies must also tell channel owners that any kids-focused content is subject to COPPA rules.

Google and YouTube aren’t the only companies to get popped with fines for targeting ads to kids and collecting information without consent. Oath (now Verizon Media Group and the once and future owner of TechCrunch), was forced to pay a $5 million settlement for similar violations.