Google, YouTube to pay $170m for collecting data on kids for targeted advertising

Alphabet subsidiary Google and its video sharing service YouTube will pay $170 million to settle allegations by the Federal Trade Commission and New York’s Attorney General that it violated federal law by collecting data on kids without their parents’ consent. 

Google and YouTube will pay $136 million to the FTC and $34 million to New York to settle the allegations it violated rules under the Children’s Online Privacy Protection Act (COPPA) — a law introduced in 1998 aimed at protecting children under 13.

It is the largest penalty the FTC has issued under COPPA since the law was introduced. An update in 2013 brought browser cookies within COPPA’s scope. 

Google and YouTube were accused of collecting personal information from kids, in the form of cookies, without their parents’ consent. The cookies were used for ‘behavioral advertising’ aimed at children, allowing Google to target ads based on the behavior of a device as visits different websites and apps. 

While YouTube itself isn’t targeted at kids, the complaint alleges Google and YouTube knew that some YouTube channels are targeted at kids and that it profited by tracking kids for behavioral advertising, which is more lucrative than contextual advertising for both channel owners and Google and YouTube.   

The complaint, for example, highlights that YouTube told toymaker Mattel that “YouTube is today’s leader in reaching children age 6-11 against top TV channels”. 

On the other hand, Google allegedly told an advertising company that YouTube had no users under 13 and therefore channels didn’t need to comply with COPPA.

“YouTube touted its popularity with children to prospective corporate clients,” said FTC Chairman Joe Simons. 

“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.”

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Google and YouTube will now need to establish a system that requires channel owners, upon every upload, to designate the content is for kids or not. 

Google also now isn’t allowed to use behavioral advertising on content aimed at children or else it will violate COPPA. This could be a major drag on revenue for YouTube and Google as well as channel owners who share a 45% cut of channel ad revenues with the company. 

Bloomberg recently reported that cutting out targeted ads on videos for kids could impact 10% of YouTube kids section revenues, equivalent to about $50 million per year.  

YouTube CEO Susan Wojcicki in a blogpost today said that in four months it will “treat data from anyone watching children’s content on YouTube as coming from a child” and will only use “what is needed to support the operation of the service.”

More importantly, YouTube will stop serving targeted ads on kids content and remove comments and notifications, she said.

Not all FTC commissioners agreed with the terms of the settlement. Commissioner Rebecca Kelly Slaughter argued in a dissenting statement that the settlement should require YouTube and Google to police how content creators designate content. 

Some content makers, she argued -- particularly creators outside of the US that are not subject to COPPA -- may think it’s worth risking mis-labelling kids content in order to skirt around the ban on behavioral advertising. 

“The order does not require YouTube to police the channels that deceive by mis-designating their content, such as by requiring YouTube to put in place a technological backstop to identify undesignated child-directed content and turn off behavioral advertising,” Slaughter wrote. 

As for the policing concerns raised by Slaughter, Wojcicki said YouTube would “use machine learning to find videos that clearly target young audiences, for example those that have an emphasis on kids characters, themes, toys, or games.”

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