YouTube settlement with FTC includes $170M fine, changes to how it monetizes children’s content

YouTube has reached a settlement with the Federal Trade Commission and New York attorney general for allegedly violating the Children’s Online Privacy Protection Act (COPPA), according to CNBC. The agreement includes a combined $170 million fine — $136 million to the FTC and $34 million to the New York attorney general — and requires YouTube change data collection on child-directed content on the platform.

“This latest violation is extremely serious. The company baited children using nursery rhymes, cartoons and other kid-directed content on curated YouTube channels to feed its massively profitable behavioral advertising business,” said FTC Commissioner Rohit Chopra in a dissenting statement on the settlement.

The charges against YouTube. The FTC and New York attorney general charged YouTube with violating COPPA laws by collecting data on minors without parental consent. YouTube was also accused of claiming it was a leader in reaching children ages 6 to 11 when marketing itself to toy companies like Mattel and Hasbro — while simultaneously telling an advertising company it did not have to comply with COPPA because it didn’t have users younger than 13 years old, according to the CNBC report.

“YouTube touted its popularity with children to prospective corporate clients. Yet when it came to complying with COPPA, the company refused to acknowledge that portions of its platform were clearly directed to kids,” wrote FTC Chairman Joe Simons.

YouTube to modify data collection policies. In addition to the $170 million it has agreed to pay (the largest amount every paid to the FTC for COPPA violations), YouTube is also changing its data collection and ad targeting policies connected to children’s content.

“Starting in about four months, we will treat data from anyone watching children’s content on YouTube as coming from a child, regardless of the age of the user,” wrote YouTube CEO Susan Wojcicki on the Official YouTube blog, “This means we’ll will limit data collection and use on videos made for kids only to what is needed to support the operation of the service.”

No more personalized ads on kid videos. Wojcicki said YouTube will also stop serving personalized ads on children’s content “entirely” — meaning children’s content will still be monetized, but ad targeting will be limited to ads that have not been personalized to the viewer based on their specific activity and behavior on the platform.

We asked YouTube for clarification on how ads will be targeted to children’s content going forward. In response, the company sent a link to (and the full copy) of the blog post stating it would stop serving personalized ads, but did not offer any further explanation.

How YouTube will identify children’s content. YouTube is putting the onus on creators to notify the platform if their videos fall into the category of children’s content. The company said it will also use machine learning to identify videos that target children, “For example, those that have an emphasis on kids characters, themes, toys or games.”

Wojcicki said the company is giving creators impacted by the platform updates four months to adjust before the coming changes. “We recognize this won’t be easy for some creators and are committed to working with them through this transition and providing resources to help them better understand these changes,” wrote Wojcicki.

Why we should care. YouTube’s platform changes resulting from this settlement will impact advertisers two-fold. First, limiting the amount of data being collected on anyone watching children’s content means YouTube will have less information on users to target ads.

Also, any marketers or advertisers aiming to reach users viewing children’s content are going to have a harder time implementing highly targeted campaigns as this type of content will no longer include personalized ads. Marketers will have to rely on “non-personalized” signals for ads targeting children’s content, and could potentially see a drop in ad performance and engagement.