Sept. 4 (UPI) -- YouTube will pay a $170 million settlement after federal regulators found the tech giant illegally collected personal information from children without parents' consent.
YouTube, owned by Google, will pay $136 million to the FTC and $34 million to New York for violating the state's Children's Online Privacy Protection Act. The FTC portion is the largest fine the regulator has received from a COPPA case in more than 20 years.
The complaint accused YouTube of using cookies to track children's behavior across the Internet.
"YouTube touted its popularity with children to prospective corporate clients," FTC Chairman Joe Simons said in a statement. "Yet when it comes to complying with COPPA, the company refused to acknowledge that portions of its platform were clearly directed to kids. There's no excuse for YouTube's violations of the law."
The ruling requires child-oriented content creators to disclose data practices and get parental consent before collecting information on children under 13 years old. That could affect large advertisers such as Mattel and Hasbro who use YouTube to reach young children who no longer watch television.
"Google and YouTube knowingly and illegally monitored, tracked and served targeted ads to young children just to keep advertising dollars rolling in," New York Attorney General Letitia James said in a statement. "Those companies put children at risk and abused their power, which is why we are imposing major reforms to their practices and making them pay one of the largest settlements for a privacy matter in U.S. history."
YouTube promoted itself to toy makers as the "leader" in reaching children ages 6 to 11. In a blog post, YouTube said it will take steps to address the concerns.
"From its earliest days, YouTube has been a site for people over 13, but with a boom in family content and the rise of shared devices, the likelihood of children watching without supervision has increased," YouTube said in a statement.
Child-focused content will no longer have personalized advertisements and the comments and notifications will be disabled. Content creators will be responsible for identifying whether their video is targeted toward children but YouTube also has algorithms that scour the Internet looking for videos that are mislabeled or have copyrighted content.
The Center for Digital Democracy, one of the plaintiffs in the suit, said the fine wasn't enough.
"A paltry financial penalty of $170 million -- from a company that earned nearly $137 billion in 2018 alone -- sends a signal that if you are politically powerful corporation, you do not have to fear any serious financial consequences when you break the law," director of the Center for Digital Democracy Jeff Chester said.
But TechFreedom President Berin Szoka criticized the FTC for settling the case rather than taking it to court. He said this settlement is bad for artists, content creators, parents and children.
"This settlement will cut advertising revenue for creators of child-directed content by more than half," Szoka said in a statement. "This will give content creators a perverse incentive to mislabel their content. COPPA was supposed to empower parents, but the FTC's new approach actually makes life harder for parents and cripples functionality even when they want it."
It's the second time the FTC has hit a major tech company with a big fine in recent months. In July, Facebook paid a $5 billion settlement to settle privacy allegations.