YouTube will pay $34 million of the $170 million fine to New York. | Jeff Chiu/AP Photo Technology Google's YouTube hit with $170M fine over children's privacy

The Federal Trade Commission and New York's attorney general on Wednesday slapped a $170 million fine and other sanctions on Google-owned YouTube over its handling of children's data, in the latest government crackdown on the tech industry's business practices.

The settlement resolves allegations that YouTube violated a federal children's online privacy law by tracking kids under 13 years old without their parents' consent, and serving targeted advertisements to them.


Under a consent decree, YouTube will require users to self-identify whether videos they upload are meant for children, obtain parental consent before collecting personal information about kids and provide its employees with annual training on how to comply with the children's privacy law. Google and YouTube have also agreed to no longer use personal data previously collected from kids. YouTube will pay $34 million of the $170 million fine to New York.

"This settlement achieves a significant victory for the millions of parents whose children watch child-directed content on YouTube," Republican FTC Chairman Joe Simons and fellow GOP Commissioner Christine Wilson said in a joint statement. "It also sends a strong message to children’s content providers and to platforms."

POLITICO reported last week the fine would range between $150 million and $200 million.

The penalties are the latest sign of regulators' increased scrutiny of Silicon Valley's biggest companies. The FTC levied a $5 billion fine against Facebook in July following an investigation into the social media giant's data practices. Facebook later revealed that the FTC has opened an antitrust investigation into the company, and the Justice Department announced its own broad review of the tech industry's impact on competition.

But the FTC's two Democrats voted against the YouTube settlement, underscoring deep divisions at the agency about how tough to be with the nation's biggest tech companies. And unlike the Facebook fine, the Justice Department didn't sign off on the FTC's YouTube penalty by filing it in court. The reasons for DOJ's decision weren't immediately clear, and a department official declined to elaborate.

Privacy activists, meanwhile, said the FTC should have been much harder on YouTube. Jeff Chester, executive director of the Center for Digital Democracy, praised the agency for taking action but said it failed to sufficiently penalize Google, calling the $170 million fine "paltry."

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"Google made billions off the backs of children, developing a host of intrusive and manipulative marketing practices that take advantage of their developmental vulnerabilities," Chester said. "More fundamental changes will be required to ensure that YouTube is a safe and fair platform for young people.”

“[I]t’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," said Josh Golin, head of the Campaign for a Commercial-Free Childhood.

Simons defended the fine and the restrictions imposed on YouTube during a press conference at the agency's Washington headquarters.

"No other company in America is subject to these types of requirements, and they will impose significant costs on YouTube," Simons said.

Speaking after the press conference, Andrew Smith, the head of the FTC's consumer protection bureau, said he didn't know if there was any significance to the DOJ sitting it out and said it wasn't unprecedented. "It's sort of the same difference, from my perspective. And whether it's 'U.S. versus' or 'FTC versus,' we're getting the same relief, we're getting the penalty, we're getting the order. So it's all good," he said.

In a blog post, YouTube CEO Susan Wojcicki said in four months, the company will limit data collection on videos made for kids and stop serving personalized ads on the content. In addition to requiring users to identify videos geared toward children, the company will also use artificial intelligence to find videos that target minors, she said.

She noted the changes will have a "significant business impact" on creators of kids' and family content who make money from behavioral advertising, and said YouTube will establish a $100 million fund to support "thoughtful, original" children's content on its platforms.

"We recognize this won’t be easy for some creators and are committed to working with them through this transition and providing resources to help them better understand these changes," Wojcicki said.

A coalition of privacy groups complained to the FTC in April 2018 that YouTube violated the Children’s Online Privacy Protection Act by collecting personal information about minors and using it to target advertisements at them without getting consent from parents. The organizations argued the company knowingly targeted children, ignoring restrictions on the collection of personal information from users under 13. The children's privacy law, known as COPPA, went into effect nearly two decades ago.

YouTube's terms of service state it is not intended for children. But the New York attorney general's office said it discovered that a "well-known" YouTube channel operator repeatedly informed Google and YouTube that its videos were directed toward children under 13, according to a news release. The AG's office informed the FTC of the issue in September 2016, a spokesperson said.

“Google and YouTube knowingly and illegally monitored, tracked, and served targeted ads to young children just to keep advertising dollars rolling in,” New York AG Letitia James, a Democrat, said in a statement. “These companies put children at risk and abused their power, which is why we are imposing major reforms to their practices and making them pay one of the largest settlements for a privacy matter in U.S. history."

The $170 million fine on YouTube dwarfs the FTC's previous record penalty of $5.7 million for a COPPA violation. But the commission's 3-2 party-line vote — with the Republican majority led by Simons voting for the settlement and the two Democratic members voting against it — appeared to deepen the agency's partisan split about how to confront the tech industry.

In a repeat of the commission's vote over the Facebook penalty, the FTC's Democrats, Rohit Chopra and Rebecca Kelly Slaughter, said they favored much tighter restrictions.

Slaughter said the FTC should require a commitment from YouTube to police the identification of children's videos, noting the incentive for some content creators to be less than accurate in order to continue getting revenue from behavioral advertising.

"YouTube profits off of behavioral advertising proportionally with its content creators; when behavioral advertisements are disabled, YouTube also takes a financial hit," Slaughter said in her dissenting statement. "A cynical observer might wonder whether in the wake of this order YouTube will be even more inclined to turn a blind eye to inaccurate designations of child-directed content in order to maximize its profit."

Chopra advocated for a higher financial penalty for YouTube. But Simons and Wilson, the two GOP commissioners, argued that the $170 million fine and the conduct changes required by the settlement are "almost certainly better" than what the agency could get through litigation.

"We choose not to gamble the protection of children now in hopes of hitting a jackpot in the future," the Republicans said in their statement.

And Smith, the FTC's consumer protection chief, said the commission will conduct enforcement sweeps of YouTube to determine if videos targeted at kids are being properly identified.

"There will be consequences for content creators who misdesignate, including being kicked off the YouTube platform," Smith said.

YouTube's treatment of kid-related content has come under increasing criticism, particularly after a New York Times report in June that found that the platform's recommendation engine sexualizes children by surfacing videos of partially clothed kids to users who have previously sought out such content.

YouTube continues to face pressure in Congress, with lawmakers calling for a bevy of changes to the platform. Reps. David Cicilline (D-R.I.), head of the House antitrust subcommittee, and Jeff Fortenberry (R-Neb.) have urged the FTC to require that videos directed at children be moved off YouTube’s main platform and onto YouTube Kids, its dedicated service for kids' content.

COPPA author Sen. Ed Markey (D-Mass.) has also sought a series of privacy safeguards, including the deletion all data under Google's control collected from children under 13 and a ban on Google launching any child-directed product or service until it has been reviewed and approved by an independent panel appointed by the FTC.

Markey said the FTC let Google off the hook with a "drop-in-the-bucket fine." He pledged to introduce legislation that would ban website design features like auto-play and limit advertising on child-focused platforms.

"The FTC should have issued a colossal fine that fits Google’s crime and demanded that Google make significant structural changes to their business practices for the sake of the millions of children who use Google every day," he said in a statement.

And Republican Sen. Josh Hawley of Missouri, a frequent critic of major tech companies, signaled his growing frustration with the FTC.

"Every day I lose more confidence in the FTC," Hawley tweeted. "This paltry fine is an insult to every parent in America who has had their children’s privacy violated."

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