In this file photo taken on June 28, 2013 a webcam is positioned in front of YouTube's logo in Paris. Picture: LIONEL BONAVENTURE / AFP
In this file photo taken on June 28, 2013 a webcam is positioned in front of YouTube's logo in Paris. Picture: LIONEL BONAVENTURE / AFP

Washington  — Google’s YouTube will pay a $170m fine and limit adverts on children’s videos to settle claims that the company violated their privacy laws.

The world’s largest video-sharing site agreed to pay the fine, which is a record for a children’s privacy case, to the US Federal Trade Commission (FTC) and New York State for failing to obtain parental consent in collecting data on children under the age of 13 years, the FTC said. Starting in four months, Google also will limit data collection and turn off commenting on videos aimed at children, YouTube announced at the same time — moves that will hamstring its ability to sell advertisements against a massive portion of its media library.

The settlement under the 1998 Children’s Online Privacy Protection Act (Coppa) represents the most significant US enforcement action against a big technology company in at least five years over its practices involving minors. Washington is stepping up privacy and antitrust scrutiny of the big internet platforms that have largely operated with few regulatory constraints.

“The $170m total monetary judgment is almost 30 times higher than the largest civil penalty previously imposed under Coppa,” FTC chair Joe Simons said in a joint statement with fellow Republican commissioner Christine Wilson. “This significant judgment will get the attention of platforms, content providers, and the public.”

The commission’s two Democrats broke from its three Republicans, however, saying the settlement did not go far enough to fix the problems. Some consumer advocates have criticised earlier reports of the fine as an insufficient deterrent, given the size of the company.

YouTube said it would rely on both machine learning and video creators themselves to identify what content was aimed at children. The algorithms would look at cues such as children’s characters and toys, although the identification of youth content can be tricky. Content creators are being given four months to adjust before changes take effect, the company said.

The company will also spend more to promote its children's app and establish a $100m fund, disbursed over three years, “dedicated to the creation of thoughtful, original children’s content,” CEO Susan Wojcicki wrote in a blog post.

“Today’s changes will allow us to better protect kids and families on YouTube,” Wojcicki wrote in the blog, which acknowledged the rising chances that children are watching the site alone. “In the coming months, we’ll share details on how we’re rethinking our overall approach to kids and families, including a dedicated kids experience on YouTube,” she said.

YouTube has already begun plans to strip videos aimed at children of “targeted” adverts, which rely on information such as web-browsing cookies, Bloomberg has reported. The company violated Coppa with data collection to serve these adverts, the FTC alleged.

Some consumer advocates say the move away from targeted adverts would do little to stop tracking of children when they watch content aimed at general audiences, and that relying on video creators to make the changes could hurt compliance.

Cracking down

The FTC has been cracking down on firms that violate Coppa. It fined the popular teen app now known as TikTok $5.7m in February to resolve claims the video service failed to obtain parental consent before collecting names, e-mail addresses and other information from children under 13 years. The agency is also planning to revamp its rules regarding children’s online privacy.

Alphabet’s Google doesn’t break out sales for the video site, but the company has reported that YouTube is its second-largest source of revenue behind search advertising. Research firm Loup Ventures estimates that 5% of YouTube’s annual revenue, or roughly $750m a year, comes from content aimed at children.

Bloomberg