In a significant legal development highlighting the importance of protecting minors' digital data, the American entertainment and media conglomerate Disney to pay $10 million to settle a lawsuit concerning the unlawful collection of children's data. The announcement came via the U.S. Department of Justice, which confirmed that a federal court had approved the settlement agreement to end the dispute between the federal government and both Disney World Services and Disney Entertainment Operations.
Details of the settlement and violations
Under the terms of the settlement, Disney will pay $10 million in civil penalties to resolve claims brought by the Federal Trade Commission (FTC). These claims centered on the company's alleged violation of the Children's Online Privacy Protection Act (COPPA), specifically regarding how it managed its video content on YouTube. The government complaint alleged that Disney failed to properly label its channels and content aimed at children, allowing the unchecked collection and use of young viewers' data for advertising purposes.
What is the COPPA Act and why is it important?
To understand the context of this fine, it's important to refer to the Children's Online Privacy Protection Act (COPPA), a U.S. federal law enacted in 1998. This law strictly prohibits online platforms and websites from collecting, using, or disclosing personal information (such as geolocation, device identifiers, and browsing history) of children under the age of 13 without prior notification and explicit parental consent. These laws are a cornerstone of protecting minors from commercial exploitation and behavioral advertising targeting in the digital space.
Historical context: The 2019 YouTube crisis
Disney’s current case cannot be separated from the major transformations YouTube has undergone in recent years. In 2019, Google (YouTube’s parent company) agreed to pay a record $170 million fine to settle similar allegations of violating the COPPA. Following that settlement, YouTube radically changed its policies, requiring content creators to label their videos as either “made for kids” or “not made for kids.” When the former is selected, targeted advertising, comments, and data collection features are automatically disabled. Disney’s problem lies in the claim that it did not strictly adhere to these labels, resulting in the continued collection of data from its child audience.
Expected impacts on the content industry
This fine serves as a stark warning to all major companies and content creators worldwide. It underscores that regulatory bodies will not compromise on privacy standards, even for entertainment giants. This case is expected to prompt companies to thoroughly review their digital strategies, moving away from behavioral advertising when dealing with children's content and toward contextual advertising that doesn't require collecting personal data, in order to avoid future legal repercussions and hefty fines.
