I have mixed feelings about the record $170 million settlement between Google and the Federal Trade Commission over Google’s alleged violations of the
Children’s Online Privacy Protection Act (COPPA). Even though the fine represents more than all other COPPA fines combined, it still amounts to a slap on the wrist compared with the enormous amount of money made by Google’s parent, Alphabet. According to Wired, it translates to “roughly two days’ worth of profit.”
According to the FTC, YouTube collected information, “in the form of persistent identifiers that are used to track users across the internet—from viewers of child-directed channels.” The agency added that “YouTube earned millions of dollars by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels.”
There is no way to know for sure who those cookies are associated with. Given the nature of the content, it’s likely to be mostly children, but – at least for very young children – it’s also likely that their parents.
In addition to paying the fine, YouTube also promised to change the way it monetizes children’s content.
COPPA requires verified parental consent before children under 13 can provide any personal information to a commercial service. It’s the main reason that Facebook, Twitter, Snapchat and most other social media companies don’t allow anyone to use their services if they say they are under 13.
Google has similar rules when it comes to children setting up their own YouTube accounts, but there is a significant amount of content on YouTube that’s designed to appeal to young users. Think Saturday morning TV cartoons on steroids. And, as long as a child isn’t creating an account (required to upload content), YouTube doesn’t ask for their age.
Behavior vs. contextual advertising
Like most online commercial media sites, YouTube makes money through behavioral advertising, which is different than the contextual advertising of traditional commercial media such as TV, print and radio. For example, if a child sees an ad for a toy or a food item when watching cartoons, that ad is shown because of the content attracts children. With behavioral advertising, the advertisers don’t just know the basic demographics of their audience, but also what other sites users of that device or account have visited. What’s more, the mere fact that they are watching a particular program or engaged in a particular online activity is recorded and shared with other advertisers, which is more valuable than the ability to show them an ad based on the program they’re viewing or site they’re visiting. Because it’s device or account based, Google doesn’t necessarily know who is viewing.
Before I go on, I must disclose that ConnectSafely, the non-profit internet safety organization which I co-founded, receives money from Google and has advised Google on various child-related products and services, including YouTube Kids. But my relationship with Google doesn’t make me unsympathetic to the views of the FTC. I agree that Google violated both the spirit and the letter of COPPA and feel that it’s appropriate for it to pay a fine and change its data collection and advertising policies for children under 13.
Funds could be better used
I do regret that the $170 million fine is going to the federal treasury instead of being earmarked for programs to educate families on internet safety and privacy. The total budget of all the internet safety, privacy and security groups combined doesn’t come close to that amount and isn’t even a fraction of the $5 billion fine that Facebook recently paid as the result of an FTC settlement.
With privately brought class-action civil cases, it is common for non-profits to get part or even all of the settlement funds in what is called a cy-près award. In many cases, the non-profits provide services or information to benefit people who may have been affected by the alleged misdeeds of the company that was sued. For example, several years ago, I served (without compensation) on the board of the Digital Trust Foundation, which received $6.5 million from a class action settlement from Facebook over its ill-fated Beacon program. The foundation distributed this money to “fund projects and initiatives that promote the cause of online privacy, safety and security,” and I’m proud of the work done by many of the groups we funded. Unless Congress decides to fund internet privacy or safety programs (which is unlikely), none of Facebook’s recent $5 billion or Google’s $170 million FTC settlement will go to the type of groups funded by our foundation’s relatively paltry $6.5 million dollars.
In addition to being bothered about where these fines wind up, I’m also bothered by an unintended consequence of Google’s settlement.
While Google probably deserves the fine and can easily afford it, the changes required by this settlement will have an enormous adverse affect on numerous small businesses, individuals and organizations that create YouTube content for children because they won’t earn nearly as much from contextual ads as they now do with behavioral ads.
I’m not arguing that they should earn money from behavioral ads. But I do worry that some of these creators will go out of business and no longer serve the entertainment and educational needs of their young viewers.
“We know these changes will have a significant business impact on family and kids creators who have been building both wonderful content and thriving businesses,” wrote YouTube CEO Susan Wojcicki, on YouTube’s blog, “so we’ve worked to give impacted creators four months to adjust before changes take effect on YouTube.”
As a partial solution, Wojcicki said that YouTube is “establishing a $100 million fund, disbursed over three years, dedicated to the creation of thoughtful, original children’s content on YouTube and YouTube Kids globally.” That’s a good start, but it’s still not enough. Children need and deserve great content as well as privacy and freedom from intrusive advertising. That’s why I’ve long been a fan of PBS-Kids and would like to see government and private industry step up to the plate to fund more great online content for children.
Disclosure: Larry Magid is CEO of ConnectSafely.org, a nonprofit internet safety organization that receives financial support from both Google and Facebook.
Published at Fri, 06 Sep 2019 09:00:32 +0000