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A $170 Million Joke: Why the FTC’s ‘Record’ YouTube Fine for Collecting Kids’ Data Won’t Change Anything

Two days—that's how long it will take Google to earn enough to pay a record $170 million fine aimed at punishing the company for, in the words of a Federal Trade Commissioner, "bait[ing] children using nursery rhymes, cartoons, and other kid-directed content" on its YouTube channels.

If people wonder why Big Tech doesn't seem to take privacy seriously, the fine, announced on Wednesday by the FTC and New York's Attorney General, is a good reason why. The penalty was levied under a law called the Children's Online Privacy Protection Act (COPPA)—a law that forbids tracking what kids do online. Because it blatantly violated the law, Google has agreed to pay the $170 million fine.

And while $170 million may sound like a lot of money, consider the sum from the perspective of a Google executive. The search giant made $30.7 billion in profit last year, which amounts to $84.2 million per day. In other words, two days of profit is literally a small price for Google to pay in exchange for selling kids' advertising data to Mattel and Hasbro—the companies that make My Little Pony, Hot Wheels, and other staples of childhood. As this figure applies to YouTube's revenue, Google breaks out few specifics. But it's quite possible that the money it made from selling children's data has exceeded the FTC's fine.

That is why YouTube's behavior is easy to understand: Violating the COPPA law was a sound business decision, though an amoral one. But why did the FTC the company off so lightly? A fine of two days' profit is not going to deter YouTube—or any tech giant—from doing something like this again. What was the agency thinking?

Unlike other data privacy cases, the FTC wasn't hamstrung by a quirk of U.S. law that basically gives companies a get-out-of-jail free card for first time offenses. The COPPA law, because it concerns children, is a serious piece of legislation that contains real teeth. Fines for breaking it start at $16,000 per violation—and that's on the low end. If the FTC really wanted to punish YouTube, the agency could have demanded a fine in the tens or hundreds of billions. Why didn't it?

A likely reason is the agency felt out-gunned. According to Dylan Gilbert, a policy fellow at the advocacy group Public Knowledge, the majority of the Commissioners who approved the 3-2 settlement may have feared losing if the case went to trial—in part because the FTC's legal team is stretched thin, while YouTube can hire a hundred of the country's top lawyers without blinking.

One dissenting commissioner basically accused his colleagues of chickening out when it comes to privacy cases, picking on small companies but letting Big Tech breathe easy.

"The approach in this [YouTube] matter is inconsistent with other children’s privacy enforcement actions against small companies, where individuals are closely scrutinized and settlement terms are crippling," writes Commissioner Rohit Chopra. "This outcome reinforces my concerns that the Commission brings down the hammer on small firms, while allowing large firms to get off easier."

Google isn't alone in getting off easy. Earlier this summer, the FTC levied a $5 billion fine on Facebook for its misuse of consumer data, an amount that one critic compared to a parking ticket. According to Gilbert, this pattern is likely to continue unless Congress passes new laws that give the FTC and other agencies a fighting chance to bring Big Tech to heel.

"We’ve got a powerful, dominant wealthy company that’s essentially getting a slap on the wrist here," he says. "We’ve consistently called for comprehensive privacy legislation that would give the FTC more legal and technical resources to adequately protect consumer privacy in the digital age."

So next time you hear of a regulator slapping an impressive-sounding fine on one of the tech giants, ask if the fine is likely to make any difference. As long as the penalty amounts to just a few days' profit, there's no reason to think Big Tech will behave any differently moving forward.

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