The U.S. Federal Trade Commission (FTC) has been busy lately. The agency followed up its recent $5 billion Facebook fine with two new settlements last week and this morning, with YouTube and credit reporting agency Equifax.
YouTube fine about kids and data collection. According to a report last week in The Washington Post Google and the FTC have agreed to a settlement of an investigation into whether YouTube improperly collected children’s data in violation of the Children’s Online Privacy Protection Rule (COPPA). The settlement will reportedly include a “multimillion-dollar fine. It’s not clear, however, whether there will be any changes to YouTube’s treatment of videos directed at kids or related data collection practices.
The fine — in the millions, not billions — is likely to have a marginal if any impact on Google, which reports earrings later this week. Investors are much more focused on the company’s ad-revenue growth than on monetary penalties from regulators. Investors have already shrugged off nearly $10 billion in fines from the European Commission over the past several years.
According to The Post’s report, the YouTube settlement was approved by the FTC’s three Republican members and opposed by its two Democrats. This 3-2 vote split was also true of the Facebook fine, which the Democrats reportedly opposed because it wasn’t stricter.
Equifax could pay up to 20% of gross revenue. Separately, Equifax is going to pay “at least $575 million, and potentially up to $700 million” for its massive 2017 data security failure that exposed the personal financial information of nearly 150 million people. The settlement with the FTC, Consumer Financial Protection Bureau (CFPB), and U.S. states, which requires court approval, is the largest fine ever imposed for a data breach and represents up to 20% of Equifax’s 2018 annual revenue.
The settlement contains a range of provisions beyond the financial penalties, including free credit reports and credit monitoring for a number of years. All U.S. consumers will be entitled to up to six free credit reports annually for seven years, according to the terms of the settlement. Some people who can prove they were affected may be entitled to financial compensation. More information is available on the settlement website.
Why we should care. Regardless of whether we see federal privacy legislation before or after the 2020 election, the FTC is signaling a willingness to step up enforcement of data security and privacy in response to intensifying hacking and public concern about these issues. In the case of the major tech companies, financial penalties may be embarrassing but have limited impact because of their massive revenues. However, for companies with less clout or revenue, such penalties could be material.