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Some Federal Trade Commission officials are calling the agency's fine against Musical.ly (now known as TikTok) for children’s privacy violations a “big win.” But critics say it highlights how Washington regulators aren’t doing enough to keep kids safe online. 

The fine against the app — which lets people create lip-syncing music videos — is the largest the agency has issued in a children’s privacy case. That might sound like a steep punishment, but at $5.7 million, critics say it’s actually a relatively paltry sum for a Silicon Valley darling that was acquired by the Bytedance (the Chinese maker of TikTok) for close to $1 billion. 

That penalty for illegally collecting data -- such as location information -- from children under 13 must be higher to properly enforce the Children’s Online Privacy Protection Act, according to Sen. Edward J. Markey (D-Mass). 

“While this fine may be a historic high for a COPPA violation, it is not high enough for the harm that is done to children and to deter violations of the law in the future by other companies,” Markey said in a statement. “I urge the FTC to make COPPA enforcement a top priority and protect the privacy of a uniquely vulnerable class of Americans — our children. That means making companies pay higher monetary penalties that will actually incentive COPPA compliance.”    

COPPA was written in 1998, when dial-up ruled and apps that would allow children to upload videos from their phones were still about a decade away. But the FTC fine against Musical.ly and the ensuing criticism could bring greater attention to the need to update children’s privacy laws in Washington -- and ratchet up pressure on regulators to scrutinize if there are other companies that may be in violation of federal law.

Privacy advocates say Musical.ly isn’t the only company taking advantage of children online and that tougher enforcement and protections are needed. 

“TikTok and others have been failing to comply with COPPA for years, and the FTC has been reluctant to challenge the privacy invasive practices of the companies that target children,” Jeffrey Chester, the executive director of the nonprofit Center for Digital Democracy, told my colleagues Craig Timberg and Tony Romm. “This is too little, too late.”

The Musical.ly case is a particularly glaring example of how children’s privacy can be exploited online. Musical.ly, the music video app TikTok merged with in 2018, has a long, well-documented history of attracting users under 13. In 2016, the New York Times reported that the app had many users in grade school, and it was using their location data to suggest people nearby follow them. 

Yesterday's fine was a rare instance where the FTC has been able to enforce COPPA on a general-interest app. COPPA provides broad privacy protections to children under the age of 13, prohibiting online services from collecting data about kids without their parents permission. But as Craig and Tony pointed out, the law only applies to services that have “actual knowledge” that the users are underage or services that are specifically directed at children. 

In the Musical.ly case, the FTC was able to show that many of the children using the app had their true ages written in their profiles, and Musical.ly still did nothing to limit their access to the app. 

“The operators of Musical.ly — now known as TikTok — knew many children were using the app but they still failed to seek parental consent before collecting names, email addresses, and other personal information from users under the age of 13,” FTC Chairman Joe Simons said in a news release. “This record penalty should be a reminder to all online services and websites that target children.”

The TikTok case could give the agency the precedent to probe other general-interest apps causing concern among children’s privacy advocates, such as Google's YouTube or the video game Fortnite.  

The agency has already received a complaint about Google’s YouTube. Over 20 advocacy groups filed a complaint last year that said YouTube is violating the law because it is collecting data about children watching videos on the service without getting permission from parents. They say YouTube knows of this because of the high-number of child-directed channels on the service. The FTC wouldn’t tell my colleagues yesterday whether it was actively investigating YouTube. 

Common Sense Media, one of the groups that filed the complaint against YouTube, weighed in: “It is no secret that tech companies are illegally and knowingly collecting personal information from children,” Jim Steyer, chief executive of Common Sense Media, said in a statement to my colleagues. “Musical.ly wasn’t the first company and they won’t be the last, which is why we need the FTC to continue to regularly enforce the Children’s Online Privacy Protection Act and hold companies accountable in a big way.”

TikTok promised to require new users to verify their age. It also launched a separate app for people under the age of 13 that complies with U.S. privacy laws and will delete all data about children it previously collected. 

“We care deeply about the safety and privacy of our users,” TikTok said in a blog post. “This is an ongoing commitment, and we are continuing to expand and evolve our protective measures in support of this.”

BITS, NIBBLES AND BYTES

BITS: Uber and Lyft are planning to give some of the most active or longest serving drivers money to buy stocks in their upcoming initial public offerings, the Wall Street Journal's Maureen Farrell reports. The companies are planning to give drivers a cash reward that can be applied toward stock.

It is typically hard for an ordinary investor to buy a company’s stock at its IPO price before it begins trading on an exchange, so this move would give drivers access they likely wouldn’t have had otherwise,” Farrell writes. 

Uber, which has 3 million drivers globally, plans to give a “significant portion” of its drivers around the world a cash bonus or stock, based on a sliding scale determined by length of service or number of trips. Uber has long tried to provide drivers with company shares, but “had encountered a roadblock because of securities laws that make it challenging to give private shares to independent contractors,” Farrell wrote. 

Lyft will give drivers that have given at least 10,000 rides $1,000 in cash that can be applied to IPO shares. 

NIBBLES: Republicans and Democrats debated during a hearing of the Senate Commerce Committee whether a federal privacy law should override state legislation, the Hill's Emily Birnbaum reported. Almost all Republicans on the panel supported the idea that federal privacy legislation should replace state laws to prevent differing rules between states. Democrats wondered whether Republicans' position aimed to circumvent a new state law in California that seeks to restrict tech giants' data-collection practices and is scheduled to go into effect next year.

“Are we here just because we don’t like the California law and we just want a federal preemption law to shut it down?” said Sen. Maria Cantwell (Wash.), the committee's ranking Democrat, according to the Hill. “I find this effort somewhat disturbing . . . This is the first thing that people want to organize here in D.C. is a preemption effort.”

But senators from both parties did agree when it came to chiding representatives of the tech industry at the hearing. “We now realize this data-sharing is not a bug,” said Sen. Marsha Blackburn (R-Tenn.), according to Birnbaum. “It is a business, it is a business model, and big tech has made a whole lot of money by exploiting the use of this data.”

BYTES: Amazon is rolling out a new program that will allow brands to delete listings for imitation products on its platform, the Wall Street Journal's Laura Stevens reports. The anticounterfeiting program, called Project Zero, has been in testing with about 15 companies, and Amazon is now inviting other brand owners to join. 

In addition to giving brands more power to monitor fake products on the platform, the company is rolling out a tool that will allow Amazon to verify a product's authenticity when it enters a warehouse via a unique code that companies can print or stick on to their packaging. Amazon engineers are also refining algorithms that can detect counterfeit goods on the service. 

“In shifting some monitoring duties and authority to brands themselves, Amazon is taking an unusual step,” Stevens wrote. “Other tech companies use outside contractors to help monitor their platforms but don’t generally let users remove content.”

PRIVATE CLOUD

-- Most of the anti-vaccination content that is broadly circulated on Facebook is produced by a relatively small group of pages on the social network, according to the Atlantic's Alexis C. Madrigal. Therefore, the reach of anti-vaccination messaging could decrease if Facebook moved to shut down only a few of such pages on the platform. Madrigal reported that an analysis with the social-monitoring tool CrowdTangle showed that seven anti-vaccination pages were behind almost 20 percent of the top 10,000 posts about vaccination since 2016.

-- The company OneWeb wants to send a constellation of satellites to space that could bring Internet access to remote parts of the world, The Washington Post's Christian Davenport reported. The company's satellites would be about the size of a refrigerator and would connect to stations on Earth. OneWeb, which was founded by Greg Wyler, has received investments from SoftBank, Qualcomm, Richard Branson’s Virgin Group, Coca-Cola and others. “The ultimate goal is to connect every school in the world, and bridge the digital divide,” Wyler told my colleague. “We’re bringing connectivity and enabling it for people around the world, and in rural populations.”

— Amazon is backing out of a skyscraper under construction in its hometown of Seattle, GeekWire's Monica Nickelsburg reported. The company doesn't plan to occupy offices that it had leased in the tower but will instead sublease them. Just as Amazon faced opposition from local politicians and activists in New York over its now-scrapped plan to open headquarters there, the company has also faced criticism in Seattle. “It’s not hard to draw a line between the battles; two Seattle City Council members traveled to New York to warn Amazon opponents about what it’s like to have the company in your backyard,” Nickelsburg wrote. (Amazon founder and chief executive Jeffrey P. Bezos owns The Washington Post.)

— More technology news from the private sector:

Technology
The company unveiled an early model of an autonomous delivery robot on Tuesday.
Hamza Shaban
Online marketplace eBay and activist investors Elliott Management and Starboard Value are nearing a settlement deal that would give the activists board seats and could open the door to the company breaking itself up.
The Wall Street Journal
China’s Huawei Technologies and South Korea’s Samsung Electronics have agreed to settle a two-year old patent dispute in the United States, court documents show.
Reuters
PUBLIC CLOUD

— The Federal Trade Commission brought its first case against the use by a company of fake paid reviews on Amazon, the Verge's Nick Statt reported. The case resulted in a settlement. “The company in question, named Cure Encapsulations, Inc. and owned by Naftula Jacobowitz, paid a third-party website to write five-star Amazon reviews for a weight-loss supplement called garcinia cambogia,” according to the Verge. “The plant, native to Indonesia, is widely mischaracterized as contributing to weight loss, but is in fact known to cause acute liver failure.”

— More technology news from the public sector:

The database includes detailed, but "de-identified," information about people's lives culled from conversations between police, social services, health workers, and more.
Motherboard
The Iranian foreign minister’s on-again, off-again resignation played out across two tense days on the very social media platforms that are either banned in his country or possibly headed that way.
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FAST FWD

— News about tech workforce and culture:

The federal Department of Labor said software maker Revel Systems has paid $791,935 in back wages to several hundred employees after an investigation found it didn’t pay them overtime.
The San Francisco Chronicle
Amazon's Nader Kabbani, who's been at the company since 2005, is running its new pharmacy initiative.
CNBC
#TRENDING

— Tech news generating buzz around the Web:

The search for intelligent life in the universe now includes queso.
Fast Company
Tesla Inc Chief Executive Officer Elon Musk changed his Twitter display name to “Elon Tusk” and promised news from his electric carmaker later this week in another late-night flurry of tweets between Tuesday evening and Wednesday morning.
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404 ERROR

— News about tech incidents and blunders:

A watchlist of risky individuals and corporate entities owned by Dow Jones has been exposed, after a company with access to the database left it on a server without a password.
TechCrunch
Video Gaming
Austrian video game company THQ Nordic is apologizing after it agreed to an ask-me-anything session on 8chan, the freewheeling Internet messaging board that was briefly delisted in 2015 by Google after being accused of hosting child pornography.
Brian Fung and Abby Ohlheiser
BURN RATE

— Today in funding news:

The rapid rise of Slack has ushered in a new wave of apps, all aiming to solve one challenge: creating a user-friendly platform where coworkers can have productive conversations.
TechCrunch
Cequence Security, a startup that helps companies protect applications against business logic attacks, announced a $17 million Series B investment today.
TechCrunch
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