Disney will pay £7.4 million fine over children's privacy violations on YouTube

Highlights

• Disney to pay £7.4m settlement for violating children's online privacy laws.
• Company failed to mark videos from Frozen, Toy Story and The Incredibles as child-directed content.
• Settlement requires Disney to create compliance programme for children's data protection.

The Walt Disney Company has agreed to pay £7.4m ($10m) to settle claims that it violated children's privacy laws by improperly labelling YouTube videos as made for children, allowing targeted advertising and data collection without parental permission.

The settlement with the US Federal Trade Commission, initially announced in September, was formalised by a federal court order on Tuesday.

The case centred on Disney's alleged failure to properly categorise children's content uploaded to YouTube, which resulted in youngsters receiving targeted advertisements and having their personal information collected without their parents' knowledge or consent.

Under the agreement, Disney Worldwide Services Inc and Disney Entertainment Operations LLC must establish a comprehensive programme to comply with children's data protection regulations.

The settlement specifically addresses content distribution on YouTube and does not involve Disney's own digital platforms.

Brett Shumate, an assistant attorney general in the US Justice Department's civil division, said in a statement "The Justice Department is firmly devoted to ensuring parents have a say in how their children's information is collected and used."

How rules apply

The case stems from requirements introduced after a 2019 settlement between the FTC and Google, YouTube's parent company.

Content creators were mandated to label videos directed towards children to prevent targeted advertising and personal data collection, which are prohibited under the 1998 Children's Online Privacy Protection Act (COPPA).

This law requires creators making content for children under 13 to notify parents and obtain consent before gathering personal information.

According to the Justice Department's complaint filed in California, Disney uploaded videos to more than 1,250 YouTube channels through various subsidiaries since 2020.

Many of these videos, particularly those uploaded during the pandemic, proved extremely popular, with viewership surging during the early months of Covid-19.

Government lawyers alleged that Disney was aware of failures to properly mark children's videos as early as June 2020, when YouTube informed the company that it had changed labels on more than 300 videos, including content from The Incredibles, Toy Story and Frozen franchises.

The misclassification allegedly resulted in YouTube collecting personal information and placing targeted advertisements on child-directed videos on Disney's behalf.

A Disney spokesperson confirmed the company has agreed to the terms originally announced in September.