Google to pay $170M to set­tle YouTube case

Crit­ics slam FTC fine over vi­o­la­tions in chil­dren’s pri­vacy

The Morning Call - - BUSINESS CYCLE - By Rachel Ler­man and Marcy Gor­don

WASHINGTON — Google will pay $170 mil­lion to set­tle al­le­ga­tions its YouTube video ser­vice col­lected per­sonal data on chil­dren with­out their par­ents’ con­sent.

The com­pany agreed to work with video cre­ators to la­bel ma­te­rial aimed at kids and said it will limit data col­lec­tion when users view such videos.

Democrats and chil­dren’s ad­vo­cacy groups, how­ever, com­plained that the set­tle­ment terms aren’t strong enough to rein in a com­pany whose par­ent, Al­pha­bet, made a profit of $30.7 bil­lion last year on rev­enue of $136.8 bil­lion, mostly from tar­geted ads.

FTC Con­sumer Pro­tec­tion Di­rec­tor An­drew Smith, who de­fended the fine amid crit­i­cism that it was too small, called the penalty his­toric.

Google will pay $136 mil­lion to the Fed­eral Trade Com­mis­sion and $34 mil­lion to New York state, which had a sim­i­lar in­ves­ti­ga­tion. The fine is the largest the FTC has lev­eled against Google, al­though it is tiny com­pared with the $5 bil­lion fine im­posed against Face­book this year for pri­vacy vi­o­la­tions.

The fed­eral gov­ern­ment has in­creased scru­tiny of big tech com­pa­nies in the past two years — es­pe­cially ques­tion­ing how the tech giants col­lect and use per­sonal in­for­ma­tion from their bil­lions of cus­tomers. Many of the huge Sil­i­con Val­ley com­pa­nies are also un­der an­titrust in­ves­ti­ga­tions aimed at de­ter­min­ing whether the com­pa­nies have un­law­fully sti­fled com­pe­ti­tion.

Kids un­der 13 are pro­tected by a 1998 fed­eral law that re­quires parental con­sent be­fore com­pa­nies can col­lect and share their per­sonal in­for­ma­tion.

Tech com­pa­nies typ­i­cally skirt that by ban­ning kids un­der 13 en­tirely, though such bans are rarely en­forced. In YouTube’s lengthy terms of ser­vice, those who are un­der 13 are sim­ply asked, “please do not use the Ser­vice.”

But younger kids com­monly watch videos on YouTube, and many pop­u­lar YouTube chan­nels fea­ture car­toons or sing-a-longs made for chil­dren. Ac­cord­ing to the FTC, YouTube as­signed ratings to its video chan­nels and even had a “Y” cat­e­gory directed at kids ages 7 or un­der. Yet from an ad­ver­tis­ing stand­point, YouTube tar­geted ads to those kids just as they would adults.

“YouTube touted its pop­u­lar­ity with chil­dren to prospec­tive cor­po­rate clients,” FTC Chair­man Joe Si­mons said. Yet when it came to com­ply­ing with the law, he said, “the com­pany re­fused to ac­knowl­edge that por­tions of its plat­form were clearly directed to kids.”

Ac­cord­ing to the set­tle­ment, Google and YouTube will get “ver­i­fi­able” con­sent from par­ents be­fore they col­lect or use per­sonal in­for­ma­tion from chil­dren. The com­pany also agreed not to use per­sonal in­for­ma­tion they col­lected from chil­dren be­fore.

YouTube has its own ser­vice for chil­dren, YouTube Kids. The kids-fo­cused ser­vice al­ready re­quires parental con­sent and uses sim­ple math prob­lems to en­sure that kids aren’t sign­ing in on their own.

YouTube Kids does not tar­get ads based on viewer in­ter­ests the way the main YouTube ser­vice does. But the chil­dren’s ver­sion does track in­for­ma­tion about what kids are watch­ing in or­der to rec­om­mend videos. It also col­lects per­son­ally iden­ti­fy­ing de­vice in­for­ma­tion.

On Wed­nes­day, Google said that start­ing early next year, it will also limit tar­get­ing on its main ser­vice for videos meant for kids. Google is re­ly­ing on video cre­ators to la­bel such items, though it will also em­ploy ar­ti­fi­cial in­tel­li­gence to help.

YouTube won’t seek parental con­sent there, how­ever, even on videos in­tended for chil­dren. The com­pany is avoid­ing that pre­cau­tion by in­stead turn­ing off any per­sonal track­ing on those videos, say­ing it will col­lect only what is needed to make the ser­vice work.

The set­tle­ment now needs to be ap­proved by a fed­eral court in Washington.

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