YouTube has been ordered to pay US$170 million (S$235 million) to settle allegations that it illegally collected personal information from children without their parents' consent, the US Federal Trade Commission (FTC) announced on Wednesday (Sept 4).
In response, Google agreed to the record fine to resolve charges with the Federal Trade Commission and the attorney general of NY, which are set to announce their findings at a news conference in Washington.
Google will pay an additional $34 million to NY state to resolve similar allegations brought by the state's attorney general.
The fine is the largest the FTC has levelled against Google, although it is tiny compared with the US$5 billion fine imposed against Facebook this year for privacy violations.
YouTube outlined how it would change the way it handles children's content under the agreement.
A United States law known as COPPA, or the Children's Online Privacy Protection Act, requires websites to get permission from parents before collecting information about children under the age of 13, including using technology which tracks their browsing habits in order to target them with advertising.
YouTube has said its service is intended for ages 13 and older, although younger kids commonly watch videos on the site and many popular YouTube channels feature cartoons or sing-a-longs made for children. "The two reportedly told Hasbro that YouTube is the "#1 website regularly visited by kids". "Yet when it came to complying with (the children privacy law), the company refused to acknowledge that portions of its platform were clearly directed to kids".
Simons said the settlement makes Google liable for violations by third-party content creators, going beyond federal law that requires the platform to have knowledge that videos are directed at children.
FTC's Bureau of Consumer Protection director Andrew Smith said at a news conference Wednesday the settlement "is changing YouTube's business model, that YouTube can not bury its head in the sand, YouTube can not pretend that it is not aware of the content on its platform and hope to escape liability". The company also launched a website version of the service in August.
YouTube had been accused of tracking 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.
"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.More news: Samsung integrates 5G directly onto its latest smartphone chip
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COPPA imposes certain restrictions on the collection and use of personal data associated with children ages 12 and under.
As with the Facebook settlement, the FTC vote was 3-2, with both Democrats opposing. It has no behavioral advertising. "It was lucrative, and it was illegal".
The deal "repeats numerous same mistakes from the flawed Facebook settlement: no individual accountability, insufficient remedies to address the company's financial incentives, and a fine that still allows the company to profit from its lawbreaking", Democratic commissioner Rohit Chopra said in a dissent.
A coalition of advocacy groups that a year ago helped trigger the FTC's investigation said in a joint statement Wednesday that the outcome will reduce the amount of behavioural advertising targeting children.
But the groups say Wednesday's settlement falls short in holding Google responsible.
Indeed, the fine will barely dent Google's finances. Google's $170 million payment reflects less than 1 percent of the company's quarterly advertising revenue.
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.
YouTube also is prohibiting on kids videos any commenting, which has been a flash point for the company.
Google has not yet addressed the FTC's findings.
Google paying the fine will avoid an FTC investigation into the issue.
The settlement now needs to be approved by a federal court in Washington.