In addition to the monetary penalty, the proposed settlement requires Google and YouTube 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. In addition, the companies must notify channel owners that their child-directed content may be subject to the COPPA Rule’s obligations and provide annual training about complying with COPPA for employees who deal with YouTube channel owners.

The settlement also prohibits Google and YouTube from violating the COPPA Rule, and requires them to provide notice about their data collection practices and obtain verifiable parental consent before collecting personal information from children.

In a complaint filed against the companies, the FTC and New York Attorney General allege that YouTube violated the COPPA Rule by collecting personal information—in the form of persistent identifiers that are used to track users across the Internet—from viewers of child-directed channels, without first notifying parents and getting their consent. YouTube earned millions of dollars by using the identifiers, commonly known as cookies, to deliver targeted ads to viewers of these channels, according to the complaint.

The COPPA Rule requires that child-directed websites and online services provide notice of their information practices and obtain parental consent prior to collecting personal information from children under 13, including the use of persistent identifiers to track a user’s Internet browsing habits for targeted advertising. In addition, third parties, such as advertising networks, are also subject to COPPA where they have actual knowledge they are collecting personal information directly from users of child-directed websites and online services.

“YouTube touted its popularity with children to prospective corporate clients,” said FTC Chairman Joe Simons. “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.”

The YouTube platform allows Google account holders, including large commercial entities, to create “channels” to display their content. According to the complaint, eligible channel owners can choose to monetize their channel by allowing YouTube to serve behaviorally targeted advertisements, which generates revenue for both the channel owners and YouTube.

In the complaint, the FTC and New York Attorney General allege that while YouTube claimed to be a general-audience site, some of YouTube’s individual channels—such as those operated by toy companies—are child-directed and therefore must comply with COPPA.