Only weeks after Facebook agreed to a $5 billion settlement with the Federal Trade Commission (FTC) for privacy violations, YouTube and its parent company Google are set to pay the highest fine to date for violations of the Children's Online Privacy Protection Act (COPPA). The $170 million penalty - nearly 30 times more than the previous largest fine under COPPA - settles charges by the FTC and the New York State Attorney General that YouTube collected children's personal information for targeted advertising without parental consent and failed to post a clear privacy policy on the website describing its practices.

The settlement requires Google and YouTube to pay $136 million to the FTC and $34 million to New York State. But the most striking terms require YouTube to develop, implement, and maintain a system for channel owners to designate whether their content is directed to children, make it clear that such designation is mandatory, and notify channel owners that content directed to children may be subject to the COPPA Rule. YouTube is also required to provide COPPA compliance training to employees who manage channel owners. In addition, YouTube must submit a detailed compliance report to the State of New York in one year and furnish compliance notices and records annually for 10 years.

The vote to approve the settlement was split 3-2 along party lines. In a joint statement, FTC Chair Joseph Simons and Commissioner Christine Wilson, both Republicans, said that YouTube's obligation to create a system through which content creators must self-designate if their channels are child-directed "exceeds what any third party in the marketplace currently is required to do. It represents the first and only mandated requirement on a platform or third party to seek actual knowledge of whether content is child-directed." They also commented that the settlement signals that content creators and channel owners are now on notice that they will be subject to strict liability for COPPA violations.

Commissioner Phillips issued a separate statement focused on calculating civil penalties. He commented that the result in this instance was justified by COPPA, but warned that "privacy legislation Congress is now considering may address many privacy harms that not only result in little to no tangible consumer harm, but also are not experienced by a vulnerable class such as children." He went on to state, "I believe that the Commission should consider consumer harm and that any penalty scheme crafted by Congress should balance a range of factors, including consumer harm, to permit the innovation and choice many consumers want."

The two Democratic Commissioners, Rohit Chopra and Rebecca Slaughter, dissented, expressing dissatisfaction that the terms did not impose more stringent sanctions. While acknowledging that the settlement will "materially remake the YouTube platform," Slaughter said she would have recommended a requirement to create a "technological backstop to identify undesignated child directed content and turn off behavioral advertising." Simons and Wilson responded to Slaughter's recommendation by stating "when the COPPA Rule does not require platforms to affirmatively seek actual knowledge of whether content on channels is child-directed, adding such a requirement in the order would be an empty gesture."

This is the first instance where the FTC has indicated that a general audience platform offering content channels has COPPA responsibilities. In addition to the obligations imposed on YouTube, channel owners will need to review their activities, as well as existing agreements and relationships with third parties to determine which channels should be identified as child-directed.