YouTube Receives Trivial Fine for Violating COPPA

The FTC has claimed success with a $170 million fine against YouTube for its latest abuse of the public trust. “The settlement requires Google and YouTube to pay $136 million to the FTC and $34 million to New York for allegedly violating the Children’s Online Privacy Protection Act (COPPA) Rule. The $136 million penalty is by far the largest amount the FTC has ever obtained in a COPPA case since Congress enacted the law in 1998.” Since 2000, COPPA has required that services targeting minors or being provided to minors post a privacy policy, notify parents about the information collection practices, and get verifiable consent from the parents of the minor users before targeting ads at the children.

COPPA applies to children under the age of 13. The assumption underlying COPPA is based on the lack of consumer cynicism in young children and the need for children to have their parents or guardians involved in any purchase or other consumer transaction.

In a complaint filed against YouTube and its parent, Google (the world’s largest advertising platform), New York Attorney General and the FTC alleged that YouTube used cookies as “persistent identifiers” to track the consumers. It did so without either notice or consent in order to track the children’s media consumption and sell millions of dollars in advertising targeted at this use. Worse, as the New York Times noted, “The site also marketed itself to advertisers as a top destination for young children, even as it told some advertising firms that they did not have to comply with the children’s privacy law because YouTube did not have viewers under 13.”

The FTC approved the settlement with only a 3-2 vote, with the minority objecting to the fine’s small size in relation to the money earned by YouTube. Republicans are very concerned about the amount of discretion the FTC has regarding the settlements. Democrats are worried that the fines will not impact misconduct. Google, for example, earned $136 billion in revenue last year – almost all of which was through advertising revenue.

Since this is the foundational business model for YouTube and Google, the $170 million fine is only important to the extent it leads to a multi-billion dollar fine in the future. That is the practice of the FTC – establish the basis for a fine and then ramp up its size when the company fails to adhere to the initial settlement. There is no reason to expect YouTube to change its predatory practices, so the likelihood of a major fine in the future is a strong bet.

Social media continues to grow. YouTube is just one of many services that regularly support use by children under 13. Instagram, Tumblr, Snapchat, GroupMe, Kik, WhatsApp, Whisper and others all have children on the platform. The FTC has not adequately enforced COPPA and states attorneys general are only involved in sporadic enforcement actions.

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