by Mitchol Dunham and Will Hanisch
The Federal Trade Commission (“FTC”) announced a record-setting fine against Google and YouTube. As a result of the settlement, Google and YouTube agreed to pay $170 million for violations of the Children’s Online Privacy Protection Act (“COPPA”) and make systemic changes that leave family friendly content creators with little option but to change their business model. As part of the settlement, on or before January 1, 2020, channels will be forced to self-certify whether they make content directed at children, defined as having a target audience which under the age of 13. Children’s content creators will no longer have access to monetization from behavioral ads. Behavioral ad rates are specific to individual creators, but the loss of this revenue may be crippling for creators.
The Settlement
On September 4, 2019, YouTube and Google agreed to a settlement to resolve the allegations that they violated COPPA. This settlement included an agreement to pay a fine and undergo substantial changes in their data collection practices. The fine, while record-setting, represents a small percentage of the annual revenue of either company. The more impactful changes, both for YouTube and its content creators, will come as a result of the changes to advertising and data collection.
The changes required by the settlement include YouTube implementing a system for content creators to designate whether their content is directed to children.[1] All content creators are required to participate in this system.[2] Second, YouTube must provide annual training to its relevant employees covering COPPA.[3] Third, YouTube must comply with the requirements of COPPA.[4] Compliance includes: (1) disclosing to parents the company’s data collection practices regarding children under 13; (2) providing direct notice to parents about those practices; (3) obtaining consent from the parent to use his or her child’s data; (4) giving the parent full control over his or her child’s data; and (5) not requiring more personal information than is reasonably necessary to allow a child to use the platform.[5] Fourth, YouTube must refrain from disclosing, using, or benefitting from the data previously collected from content directed to children.[6] Finally, YouTube must submit compliance reports establishing its continued adherence to the settlement, and in effect, compliance with the requirements of COPPA.[7] See here for a more in-depth discussion about COPPA, its requirements, and YouTube’s violations.
What This Means and Future Steps
In a blog post on September 4, 2019, Susan Wojcicki addressed the settlement and announced several initiatives and changes for children’s content on YouTube. Ms. Wojcicki announced new data practices for children’s content. YouTube will no longer treat children’s content as it would any other content. Instead, data collection will be limited to only what is necessary to operate the service. YouTube will stop serving behavioral advertising on children’s content, and some features will be eliminated entirely, such as comments and notifications. Deciding what is classified as “children’s content” will be a two-step approach: self-flagging from content creators and a machine learning algorithm that will find videos clearly targeting kids, for example “[videos] that have an emphasis on kids characters, themes, toys, or games.”[8]
Ms. Wojcicki noted two other platform changes in association with the settlement. First, an increase in investment in promoting YouTube Kids and continued investment in the product.[9] The YouTube Kids app will soon be brought to the desktop.[10] Second, Ms. Wojcicki notes that the change in advertising scheme will have a significant impact on “family and kids creators.”[11] YouTube will be giving content creators four months to “adjust before [the advertising] changes take effect on YouTube.”[12] YouTube is also “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.”[13] Whether that fund actually makes it to a individual content creators is something that is hotly debated in the community.
As of the time of this posting, children’s content creators are left with more questions than answers. It is possible that larger content creators may see increases in sponsored content and direct licensing opportunities as advertisers look to continue targeting this incredibly lucrative demographic. These gains could potentially off-set or exceed the revenue lost from behavioral ads. We do not know what actual impact this settlement will have on creators who rely more heavily on ad revenue. They may be forced to either pivot their content to retain access to behavioral ads or attempt to survive on contextual ads alone. This choice will be especially hard for gaming creators. While live action creators can diversify income streams through direct sponsorships, gaming creators have fewer income streams off of the YouTube platform. In any case, this settlement is a wake-up call to content creators and platforms alike that the FTC is able and willing to regulate the online space. Online creators and businesses must take action to comply with COPPA and FTC integration guidelines or risk being subjected to serious consequences. Hopefully YouTube and other platforms will acknowledge the rampant misinformation that is currently being distributed and put creators at ease as to their future.
Next week, we will take a look at the questions still unanswered by the settlement, including potential enforcement areas on the horizon for the FTC. If you have questions about this article or how the YouTube policy changes might affect your channel, reach out to the GreenRoom team.
[1] In re Google LLC & YouTube LLC, FTC File No. 172-3083, 10 (Sept. 4, 2019) (settlement agreement).
[2] Id.
[3] Id. at 10–11.
[4] Id. at 11.
[5] Federal Trade Commission, Protecting Children’s Privacy Under COPPA: A Survey on Compliance 1–2 (Apr. 2002).
[6] In re Google LLC & YouTube LLC, at 12 (settlement agreement).
[7] Id. at 15–19.
[8] Susan Wojcicki, An update on kids and data protection on YouTube, YouTube Official Blog (Sept. 4, 2019), https://youtube.googleblog.com/2019/09/an-update-on-kids.html.
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] Id.