Google’s subsidiary YouTube will pay a record $170 million settlement over allegations by the Federal Trade Commission and the New York Attorney General that the company illegally collected personal information from children without the consent of their parents and then used the data to target them with ads.

The complaint against the companies alleges that YouTube violated the Children’s Online Privacy Protection Act (COPPA) rules by collecting personal information from viewers under age 13 of child-directed channels, without first notifying their parents and getting their consent. This was allegedly done by using cookies to track user behavior across the internet.

The settlement was passed in a 3-2 vote by the FTC Commissioners along party lines. The two Democrats, FTC commissioner Rohit Chopra and fellow commissioner Rebecca Kelly Slaughter, voted against it, saying the settlement did not go far enough to punish YouTube for its alleged misconduct.

“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.”

Under the terms of the settlement, Google and YouTube will pay $136 million to the FTC and $34 million to New York to settle the allegations.The agency reported that the $136 million penalty is the largest amount the FTC has ever obtained in a COPPA case since Congress enacted the law in 1998.

In addition to the fine, the settlement requires Google and YouTube to develop, implement, and maintain a system that permits channel owners to identify content that targets kids.

Channel owners must be notified that their child-directed content may be subject to the COPPA’s obligations and provide annual training about complying with the rules. Google and YouTube must provide notice about data collection practices and obtain verifiable parental consent before collecting personal information from children.

New York Attorney General Letitia James said that “Google and YouTube knowingly and illegally monitored, tracked, and served targeted ads to young children just to keep advertising dollars rolling in.”

James added that “these companies put children at risk and abused their power, which is why we are imposing major reforms to their practices and making them pay one of the largest settlements for a privacy matter in U.S. history.”

One of the major issues brought up is that YouTube marketed itself to Mattel and Hasboro toy companies as the “leader” in reaching children ages 6-11, the ruling found.

Yet, in one instance, the company told an advertising company that it did not have users younger than 13 on its platform and therefore channels on its platform did not need to comply with COPPA.

Before the fine was announced, YouTube made some tweaks to its platforms, including changing algorithms and ending targeted ads.

MANDEL NGAN/AFP/Getty Images

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