$170 million fine against YouTube: A message or a drop in the bucket?

WASHINGTON, D.C. — When Google was fined $170 million by the Federal Trade Commission for violating the children’s privacy protections of its YouTube subsidiary, many gasped at the size of the fine.

Others raised their eyebrows. Not because it was so big, but because — given Google’s size — it seemed so small.

The fine represents a day and a half of Google’s annual profit. The two Democrats on the FTC cited the fine as one reason for voting against the settlement, even though they agreed with the aims of the FTC action.

Here’s what happened. YouTube, which is owned by Google, had illegally gathered children’s data without their parents’ consent, according to regulators. This included identification codes used to track kids’ Web browsing.

It’s a sprawling video universe on YouTube, as 300 hours of content are uploaded every minute.

But the FTC said Google not only failed to protect children’s privacy, but it exploited their kids to advertisers such as Hasbro and Mattel, the toymaking giants.

“A 5-year-old isn’t going to understand that Ryan’s talking about the toys because Target is paying him to talk about the toys,” Josh Golin, executive director of the Center for a Commercial-Free Childhood, told The New York Times. Golin was referring to one boy’s site, which is sponsored by toymakers and features voiceovers thanking retailers for providing the toys Ryan is reviewing in the videos. “There may be some disclosure, but disclosure isn’t meaningful to a child that young.”

YouTube claimed, in one instance noted by regulators, to be watched by 93 percent of tweens, roughly the 9- to 14-year-old demographic. One problem was that content intended for children was posted not only on YouTube Kids, but also the main YouTube site.

YouTube had claimed for years that its site was not intended for children and hence not covered by the Children’s Online Privacy Protection Act, known as COPPA. However, the boasts to the toy companies belied that claim, as well as YouTube having knowledge that videos were directed at children, both key tests of COPPA.

The act permits fines as high as $45,230 for each violation. For those who can’t do long division in their head, the $170 million fine would come to 3,759 violations. The fine exceeds by far the FTC’s previous highest fine: $5.2 million against TikTok, also for children’s privacy violations.

In July, the FTC fined Facebook $5 billion for privacy violations. The figure represents close to three months of Facebook’s annual profit of $22 billion. The day the fine was announced, Facebook’s stock went up.

But back to YouTube. In addition to the fine, the FTC’s settlement also includes actions intended to change its behavior.

YouTube agreed to create a system that asks video channel owners to identify the children’s content they post so that targeted ads are not placed in such videos. YouTube must also obtain consent from parents before collecting or sharing personal details like a child’s name or photos, according to regulators.

Google said it would expand efforts to redirect children to its YouTube Kids channel, and use a form of artificial intelligence called “machine learning” to identify child-oriented videos on its main service. None of these fixes, though, will take effect until January.

YouTube also pledged to eliminate the ability to post comments on child-oriented pages. But a week after the fine was announced, Cnet, an online tech news service, did a single search for one kids-focused subject — “pretend play” — and found more than 100 videos with comments enabled, all of which featured infants, preschoolers and — as Cnet said — “other children young enough to still have their baby teeth.” Cnet added that after it contacted YouTube with a list of the videos, comments were disabled on 48 of them.

The larger problem may be the structure of the federal government. If YouTube fell under the purview of the Federal Communications Commission, the FCC could establish policy on children’s privacy. YouTube could design a protocol in the hopes of fulfilling that policy; given its size, the FCC could pass judgment on it. Other online video purveyors could then copy YouTube’s protocol.

Unfortunately, the FTC can only investigate and render judgments after the fact, once the barn door has been opened and all the horses let loose.

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