Disney to pay $10m over alleged children’s privacy law violations

The Walt Disney Company will pay $10m (£7.4m) to resolve allegations it broke children’s privacy laws by failing to label some YouTube videos as made for children, thereby allowing targeted advertising.

Disney reached a settlement with the U.S. Federal Trade Commission in September to resolve an investigation into its collection of children’s personal data.

The FTC had argued that because of Disney’s alleged failure to properly label children’s videos, children were receiving targeted advertisements and their data was being collected without parental notice or consent.

The entertainment giant also agreed to create a program to comply with children’s data protection laws, the U.S. Department of Justice announced Tuesday.

“The Department of Justice is strongly committed to ensuring that parents have a say in how information about their children is collected and used,” Brett Shumate, assistant attorney general in the Justice Department’s civil division, said in a statement announcing the federal court order.

A Disney spokesperson confirmed that the company had agreed to the terms initially announced in September.

The company previously noted that the settlement was limited to the distribution of some of its content on YouTube and did not involve digital platforms owned and operated by Disney.

The deal with regulators involves Disney Worldwide Services Inc and Disney Entertainment Operations LLC.

Following a 2019 settlement between the FTC and YouTube’s parent company Google, YouTube began requiring content creators to place labels on videos uploaded aimed at children.

The rule was intended to avoid targeted advertising and personal data collection on content aimed at children, which are prohibited under the Children’s Online Privacy Protection Act of 1998 (COPPA).

The law requires creators who create content intended for children under 13 to inform parents and obtain their consent before collecting personal information.

But regulators claimed Disney failed to identify certain videos — many of which were uploaded to YouTube during the pandemic — as being aimed at children, in violation of the law.

Since 2020, Disney has uploaded videos to more than 1,250 YouTube channels through several subsidiaries, the Justice Department said in its complaint filed in California. Many of the videos were “extremely popular,” the complaint says, and viewership skyrocketed during the early months of the Covid-19 pandemic.

Disney was aware of the failure to properly mark videos made for children as early as June 2020, according to the legal filing.

At the time, YouTube reportedly told Disney that the platform had changed the labels of more than three hundred videos, including videos from The Incredibles, Toy Story and Frozen.

Disney’s alleged misclassification “leads YouTube to collect personal information and place targeted advertisements on videos aimed at children on behalf of Disney,” government lawyers claimed.