Alphabet Inc. (NASDAQ: GOOGL) has been under a tremendous amount of scrutiny recently, and part of this is coming to a head. The U.S. Federal Trade Commission (FTC) has levied a $170 million fine against its subsidiary YouTube for violating children’s privacy laws.
YouTube has agreed to pay the $170 million fine and limit ads on kids’ videos to settle claims that it violated the 1998 Children’s Online Privacy Protection Act (COPPA). The firm is being fined for failing to obtain parental consent in collecting data on kids under the age of 13.
This fine is a record for a children’s privacy case. Out of the $170 million fine, $136 million is going to the FTC and $34 million is going to New York State.
It’s worth pointing out that the commission’s two Democrats broke from its three Republicans, however, saying the settlement did not go far enough to fix the problems. Some consumer advocates have criticized earlier reports of the fine as an insufficient deterrent, especially considering Alphabet has a market cap over $800 billion. In terms of the math, this fine is roughly 0.02% of the total market cap, a drop in the bucket.
FTC Chair Joe Simons and Republican Commissioner Christine Wilson said in a joint statement:
The $170 million total monetary judgment is almost 30 times higher than the largest civil penalty previously imposed under COPPA. This significant judgment will get the attention of platforms, content providers, and the public.
Starting in four months, Google also will limit data collection and turn off commenting on videos aimed at kids, YouTube announced at the same time moves that will hamstring its ability to sell advertisements against a massive portion of its media library.
Shares of Alphabet traded up nearly 1% at $1,178.35, in a 52-week range of $977.66 to $1,296.97. The consensus analyst target is $1,409.67.