Google and its YouTube video service will pay $170 million to settle allegations that it broke federal law by collecting personal information about children, the Federal Trade Commission said on Wednesday.
YouTube tracks viewers of children’s channels using cookies without parental consent and using those cookies to deliver million of dollars in targeted advertisements to those viewers, Reuters reported.
Google’s parent Alphabet, which generates about 85 percent of its revenue from sales of ad space and ad technology, has reported revenue of $38.9 billion in second quarter.
YouTube said in a statement Wednesday that in four months it would begin treating all data collected from people watching children’s content as if it came from a child. “This means that we will limit data collection and use on videos made for kids only to what is needed to support the operation of the service,” YouTube said on its blog on Wednesday.
YouTube in August announced it will launch YouTube Kids with separate niches for children depending on their ages and designed to exclude disturbing videos.
YouTube allows companies to create channels, which include advertisements that create revenue for both the company and YouTube.
The YouTube platform allows Google account holders, including large commercial entities, to create channels to display their content.
According to the complaint, eligible channel owners can choose to monetize their channel by allowing YouTube to serve behaviorally targeted advertisements, which generates revenue for both the channel owners and YouTube.
The complaint notes that the defendants knew that the YouTube platform had numerous child-directed channels. YouTube marketed itself as a top destination for kids in presentations to the makers of popular children’s products and brands.
For example, Google and YouTube told Mattel, maker of Barbie and Monster High toys, that “YouTube is today’s leader in reaching children age 6-11 against top TV channels” and told Hasbro, which makes My Little Pony and Play-Doh, that YouTube is the “#1 website regularly visited by kids.”
Several channel owners told YouTube and Google that their channels’ content was directed to children, and in other instances YouTube’s own content rating system identified content as directed to children. In addition, YouTube manually reviewed children’s content from its YouTube platform to feature in its YouTube Kids app.
YouTube served targeted advertisements on these channels despite this knowledge of channels directed to children on the YouTube platform. YouTube, according to the complaint, told one advertising company that it did not have users younger than 13 on its platform and therefore channels on its platform did not need to comply with COPPA.
YouTube violated the COPPA Rule by collecting personal information from viewers of child-directed channels, without first notifying parents and getting their consent. YouTube earned revenue by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels, according to the complaint.