YouTube to pay massive $170M fine as it settles claims it violated children's privacy laws

Google-owned YouTube has settled with the Federal Trade Commission and the New York Attorney General, offering to pay a fine of $170 million on allegations that it violated children's privacy laws.

The $170 million breaks down into two parts: $136 million will be paid to the FTC and the remaining $34 million will go to New York on allegations the video-sharing site violated the Children’s Online Privacy Protection Act (COPPA) Rule, which was enacted in 1998 under President Clinton.

“YouTube touted its popularity with children to prospective corporate clients,” said FTC Chairman Joe Simons in a statement. “Yet when it came 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.”

KRAKOW, POLAND - 2019/01/24: Youtube logo is seen on an android mobile phone. (Photo by Omar Marques/SOPA Images/LightRocket via Getty Images)

KRAKOW, POLAND - 2019/01/24: Youtube logo is seen on an android mobile phone. (Photo by Omar Marques/SOPA Images/LightRocket via Getty Images) (Getty Images)

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The fine was passed by a 3-2 vote by the FTC Commission, with the commissioners voting along party lines.

In the complaint by the FTC and the New York Attorney General, YouTube marketed itself to toy companies such as Mattel and Hasbro. YouTube told Mattel that it is "today’s leader in reaching children age 6-11 against top TV channels,” while telling Hasbro that it is the “#1 website regularly visited by kids.”

“Google and YouTube knowingly and illegally monitored, tracked, and served targeted ads to young children just to keep advertising dollars rolling in,” said New York Attorney General Letitia James in a statement obtained by Fox News. “These 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. My office is committed to protecting children and holding those who put our kids in harm’s way — both on and offline — accountable.”

"COPPA imposes certain requirements on operators of websites or online services directed to children under 13 years of age, and on operators of other websites or online services that have actual knowledge that they are collecting personal information online from a child under 13 years of age," reads a summary of the law on the Federal Trade Commission's website.

Despite YouTube's claims to Mattel and Hasbro, it told one advertising company "it did not have users younger than 13 on its platform," adding that channels on the platform did not need to comply with COPPA, according to the complaint.

Aside from the fine, the largest the FTC has obtained since the law was enacted, Google and YouTube are required to "develop, implement, and maintain a system that permits channel owners to identify their child-directed content on the YouTube platform so that YouTube can ensure it is complying with COPPA."

The companies are also required to "notify channel owners that their child-directed content may be subject to COPPA."

The two dissenting commissioners, Rohit Chopra and Rebecca Kelly Slaughter, said the penalties put forth against YouTube and Google did not go far enough.

"For the third time since 2011, the Federal Trade Commission is sanctioning Google for privacy violations," Chopra wrote in his dissent. "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."

"The order does not require YouTube to police the channels that deceive by mis-designating their content, such as by requiring YouTube to put in place a technological backstop to identify undesignated child-directed content and turn off behavioral advertising," Kelly Slaughter wrote in her dissent. "True, a technological backstop is not explicitly mandated by COPPA’s text, but such a requirement would, I believe, be appropriate and necessary fencing-in relief. The order’s requirement that channel owners designate content as child-directed is also not required by COPPA, yet it is a good start to fencing-in relief, to which YouTube has consented, to redress YouTube’s own COPPA violations and reduce its facilitation of others’ violations. Fencing-in relief that goes beyond bare-minimum statutory requirements is a common and important aspect of effective Commission orders."

YouTube has come under fire from both the left and right for a myriad of reasons. Earlier this week, the company said it removed more than 17,000 channels and 100,000 videos, along with at least 500 million comments, since the company announced a broad crackdown on hate speech in June.

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Fox News' Christopher Carbone contributed to this article.