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FTC approves settlement with Google over YouTube kids privacy violations

The company is expected to pay a multimillion-dollar fine as part of findings it inadequately protected kids who used its video-streaming service.

A staff member walks past the YouTube logo at Google's YouTube Space production facility in Tokyo in 2013. (Kiyoshi Ota/Bloomberg News)

The Federal Trade Commission has finalized a settlement with Google in its investigation into YouTube for violating federal data privacy laws for children, said two people familiar with the matter who were not authorized to discuss it on record.

The settlement — backed by the agency’s three Republicans and opposed by its two Democrats — finds that Google inadequately protected kids who used its video-streaming service and improperly collected their data in breach of the Children’s Online Privacy Protection Act, or COPPA, which prohibits the tracking and targeting of users younger than 13, the people said.

The company is expected to pay a multimillion-dollar fine, but the exact amount and the contours of the FTC’s settlement are unclear. The matter now rests in the hands of the Justice Department, which rarely upends the FTC’s settlements with companies under its watch.

YouTube under federal investigation over allegations it violates children’s privacy

Agency spokeswoman Cathy MacFarlane and Google spokesman Chris Dale declined to comment on the investigation.

The settlement comes at a time when technology giants are facing increased scrutiny both from governments and from users, as concerns mount regarding how users’ data is collected and protected. The FTC and the Justice Department recently divvied up Amazon, Apple Facebook and Google for supervision, something that could result in closer scrutiny of the companies’ power. And this week, lawmakers grilled executives from those companies at a hearing as part of a sprawling House investigation into alleged anti-competitive business practices by big tech.

The FTC approved a record $5 billion settlement with Facebook this month over its privacy practices and the mishandling of personal information stemming from the Cambridge Analytica controversy.

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Officials in the United States and Europe are reexamining the market power and competitive practices of some of the world’s wealthiest companies. The way big tech has handled its youngest users, in particular, has also drawn increased regulatory attention.

The FTC recently embarked on a new effort to rethink how it enforces COPPA. The agency’s chairman, Joe Simons, announced his intentions to update the process this week, attributing the need to reexamine its rules amid “rapid technological changes.” Among the FTC’s concerns are websites, video games and other services that are not explicitly marketed to children but still attract large numbers of young users. Companies have also complained that the law is unclear.

COPPA prohibits companies from collecting children’s data in most circumstances or targeting them with personalized advertising, but the law applies to only websites or apps that are directed at children or have “actual knowledge” that users are younger than 13.

Privacy advocates have filed years of complaints about YouTube to the FTC, alleging that some of the most popular channels on the streaming site — which the company says is meant for people over age 13 — are directed toward children. They include videos featuring nursery rhymes, cartoons and people opening kids’ toys. YouTube has said children can watch with parental approval, and it has no way of knowing whether kids actually receive it.

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For Google, the relatively small fine — compared to its staggering annual revenue in the billions of dollars — still carries broad legal risks for both the tech giant and the rest of the industry. Some of the problems raised by privacy advocates in the course of the government’s YouTube investigation are shared by many of the most popular online services, including social media sites, such as Instagram and Snapchat, and games including Fortnite.

During the course of the FTC’s investigation, Google has explored ways to change how YouTube handles children’s videos, a person familiar with the company’s plans previously told The Washington Post. That has included changes to the algorithms that determine which videos YouTube queues up next.

Earlier this year, the commission handed down a record $5.7 million fine against the social media app — now known as TikTok — over allegations that it illegally collected the names, email addresses, pictures and locations of children younger than 13.

Craig Timberg contributed to this report.