YouTube to pay $170M fine after violating kids’ privacy law

A picture illustration shows a YouTube logo reflected in a person's eye June 18, 2014. (REUTERS)
Updated 05 September 2019

YouTube to pay $170M fine after violating kids’ privacy law

  • Google was fined $22.5 million in 2012 for violating that settlement when the FTC found it improperly used tracking cookies on Apple’s Safari browser

WASHINGTON: Google will pay $170 million to settle allegations its YouTube video service collected personal data on children without their parents’ consent.
The company agreed to work with video creators to label material aimed at kids and said it will limit data collection when users view such videos, regardless of their age.
Some lawmakers and children’s advocacy groups, however, complained that the settlement terms aren’t strong enough to rein in a company whose parent, Alphabet, made a profit of $30.7 billion last year on revenue of $136.8 billion, mostly from targeted ads.
Google will pay $136 million to the Federal Trade Commission and $34 million to New York state, which had a similar investigation. The fine is the largest the FTC has levied against Google, but it’s tiny compared with the $5 billion fine against Facebook this year for privacy violations.
YouTube “baited kids with nursery rhymes, cartoons, and more to feed its massively profitable behavioral advertising business,” Democratic Commissioner Rohit Chopra said in a tweet. “It was lucrative, and it was illegal.”
The federal government has increased scrutiny of big tech companies in the past two years — especially questioning how the tech giants collect and use personal information from their billions of customers. Many of the huge Silicon Valley companies are also under antitrust investigations aimed at determining whether the companies have unlawfully stifled competition.
Kids under 13 are protected by a 1998 federal law that requires parental consent before companies can collect and share their personal information.
Tech companies typically skirt that by banning kids under 13 entirely, though such bans are rarely enforced. In YouTube’s lengthy terms of service, those who are under 13 are simply asked, “please do not use the Service.”
Yet many popular YouTube channels feature cartoons or sing-a-longs made for children. According to the FTC, YouTube assigned ratings to its video channels and even had a “Y” category directed at kids ages 7 or under, but YouTube targeted ads to those kids just as they would adults.
The FTC’s complaint includes as evidence Google presentations describing YouTube to toy companies Mattel and Hasbro as the “new Saturday Morning Cartoons” and the “#1 website regularly visited by kids.”
“YouTube touted its popularity with children to prospective corporate clients,” FTC Chairman Joe Simons said. But when it came to complying with the law, he said, “the company refused to acknowledge that portions of its platform were clearly directed to kids.”
According to the settlement, Google and YouTube will get “verifiable” consent from parents before they collect or use personal information from children. The company also agreed not to use data collected from children before.
YouTube has its own service for children, YouTube Kids. The kids-focused service already requires parental consent and uses simple math problems to ensure that kids aren’t signing in on their own.
YouTube Kids does not target ads based on viewer interests the way the main YouTube service does. But the children’s version does track information about what kids are watching in order to recommend videos. It also collects personally identifying device information.
On Wednesday, Google said that starting early next year, YouTube will also limit personalized ads on its main service for videos meant for kids. Google is relying on video creators to label such items, but will employ artificial intelligence to help.
YouTube won’t seek parental consent there, however, even on videos intended for children. YouTube is avoiding that precaution by instead turning off any personal tracking on those videos, saying it will collect only what is needed to make the service work. For such videos, YouTube also won’t offer features like comments and notifications.
Videos made for kids will still feature ads — just not the targeted, personal ads that generally bring in the most money for video creators.
“I think there has been a general anxiety of the kids and family community of creators on YouTube for quite some time,” said Chris Williams, CEO and founder of pocket.watch, a studio that works with many popular YouTube child stars, including Ryan ToysReview.
Pocket.watch helps YouTube stars expand beyond the streaming site and find new lines of business, from consumer products to network TV shows. Williams expects that business to become more important. But YouTube will still be the big way to build an audience, he said.
“It represents a part of the puzzle for your brand growth, a big one,” he said.
The settlement now needs to be approved by a federal court in Washington. As with the Facebook settlement, the FTC vote was 3-2, with both Democrats opposing it as too weak.
Sen. Edward Markey, a Massachusetts Democrat, said the settlement won’t turn YouTube into a safe place for children and “makes clear that this FTC stands for ‘Forgetting Teens and Children.’“
A coalition of advocacy groups that helped trigger the investigation said the outcome will reduce behavioral advertising targeting children.
Jeff Chester, executive director of the Center for Digital Democracy, said the settlement “finally forced Google to confront its longstanding lie that it wasn’t targeting children on YouTube.”
But he said the “paltry” fine signals that politically powerful corporations can break the law without serious consequences.
Other critics, including dissenting Democratic Commissioner Rebecca Slaughter, said too much responsibility was being placed on video creators to classify their own content as kid-oriented, and thus limited to less-lucrative ads. They say that potentially allows Google to turn a blind eye as some try to cheat the system to make more money through ad revenue sharing.
Andrew Smith, the FTC’s consumer protection director, acknowledged that concern as valid, but said YouTube “has strong incentives to police its platform” to avoid further action.
Google is already under a 2011 agreement with the FTC that barred it from mispresenting its privacy policy and subjected the company to 20 years of regular, independent privacy audits. Google was fined $22.5 million in 2012 for violating that settlement when the FTC found it improperly used tracking cookies on Apple’s Safari browser.


IMF downgrades outlook for world economy, citing trade wars

Updated 15 October 2019

IMF downgrades outlook for world economy, citing trade wars

  • Growth this year will be ‘weakest since the 2008 financial crisis,’ according to 2020 forecast

WASHINGTON: The International Monetary Fund is further downgrading its outlook for the world economy, predicting that growth this year will be the weakest since the 2008 financial crisis primarily because of widening global conflicts.

The IMF’s latest World Economic Outlook foresees a slight rebound in 2020 but warns of threats ranging from heightened political tensions in the Middle East to the threat that the US and China will fail to prevent their trade war from escalating.

The updated forecast released on Tuesday was prepared for the autumn meetings this week of the 189-nation IMF and its sister lending organization, the World Bank. Those meetings and a gathering on Friday of finance ministers and central bankers of the world’s 20 biggest economies are expected to be dominated by efforts to de-escalate trade wars.

The new forecast predicts global growth of 3 percent this year, down a 0.2 percentage point from its previous forecast in July and sharply below the 3.6 percent growth of 2018. For the US this year, the IMF projects a modest 2.4 percent gain, down from 2.9 percent in 2018.

Next year, the fund foresees a rebound for the world economy to 3.4 percent growth but a further slowdown in the US to 2.1 percent, far below the 3 percent growth the Trump administration projects.

IMF economists cautioned that that even its projected modest gains might not be realized.

“With a synchronized slowdown and uncertain recovery, there is no room for policy mistakes, and an urgent need for policymakers to cooperatively de-escalate trade and geopolitical tensions,” Gita Gopinath, the IMF’s chief economist, said in the report.

Last week, the US and China reached a temporary cease-fire in their trade fight when President Trump agreed to suspend a tariff rise on $250 billion of Chinese products that was to take effect this week. But with no formal agreement reached and many issues to be resolved, further talks will be needed to achieve any breakthrough. The Trump administration’s threat to raise tariffs on an additional $160 billion in Chinese imports on Dec. 15 remains in effect.

The IMF’s forecast predicted that about half the increase in growth expected next year will result from recoveries in countries where economies slowed significantly this year, as in Mexico, India, Russia and Saudi Arabia.

This year’s slowdown, the IMF said, was caused largely by trade disputes, which resulted in higher tariffs being imposed on many goods. Growth in trade in the first half of this year slowed to 1 percent, the weakest annual pace since 2012.

Kristalina Georgieva, who will preside over her first IMF meetings after succeeding Christine Lagarde this month as the fund’s managing director, said last week that various trade disputes could produce a loss of about $700 billion in output by the end of next year or about 0.8 percent of world output.

IMF economists said that one worrying development is that the slowdown this year has occurred even as the Federal Reserve and other central banks have been cutting interest rates and deploying other means to bolster economies.

The IMF estimated that global growth would have been about one-half percentage point lower this year and in 2020 without the central banks’ efforts to ease borrowing rates. “With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot,” Gopinath said.

In addition to trade and geopolitical risks, the IMF envisions
threats arising from a potentially disruptive exit by Britain from the EU on Oct. 31. The IMF urged policymakers to intensify their efforts to avoid economically damaging mistakes.

“As policy priorities go, undoing the trade barriers put in place with durable agreements and reining in geopolitical tensions top the list,” Gopinath said. “Such actions can significantly boost confidence, rejuvenate investment, halt the slide in trade and manufacturing and raise world growth.”

The IMF projected that growth in the 19-nation euro area will
slow to 1.2 percent this year, after a 1.9 percent gain in 2018. It expects the pace to recover only slightly to 1.4 percent next year.

Growth in Germany, Europe’s biggest economy, is expected to be a modest 0.5 percent this
year before rising to 1.2 percent next year.

China’s growth is projected to dip to 6.1 percent this year and 5.8 percent next year. These would be the slowest rates since 1990, when China was hit by sanctions after the brutal crackdown on pro-democracy demonstrators in Beijing’s Tiananmen Square.