In response, Google agreed to the record fine to resolve charges with the Federal Trade Commission and the attorney general of NY, which are set to announce their findings at a news conference in Washington.
Meanwhile, Google will pay $170m (€154m) to settle allegations that it broke federal law by collecting personal information about children, the US Federal Trade Commission has said.
"We are pleased that our advocacy has compelled the FTC to finally address YouTube's longstanding COPPA violations and that there will be considerably less behavioral advertising targeted to children on the number one kids' site in the world", CCFC executive director Josh Golin said in a statement Wednesday. COPPA states that websites orientated towards children must obtain parental consent to collect a child's personal information if the child is under 13 years of age, along with a notice about the site's information practices. The agreement includes a combined $170 million fine - $136 million to the FTC and $34 million to the NY attorney general - and requires YouTube change data collection on child-directed content on the platform. Yet when it came to complying with the law protecting children's privacy, he said, "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", said FTC chairman Joe Simons.
Markey, however, says the changes fall short of what is "needed to turn YouTube into a safe and healthy place for kids". In a blog post Wednesday, CEO Susan Wojcicki wrote that the changes also include disabling comments on children's content and increased investment in its separate YouTube Kids app.
"Google's violations of COPPA are brazen, widespread, and specifically created to increase profits", Markey said.
But Google will still show generic ads, as well as "contextual" ads - those that cater to the type of content rather than the specific viewer.
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The agency adds that Google markets YouTube to Mattel, Hasbro and other companies as a "top destination for kids". His dissent includes redacted data suggesting that behavioral ads improperly displayed on videos viewed by kids should have resulted in a fine into the billions for Google, a company that registered nearly $39 billion in earnings it reported in July.
The agency is also planning to revamp its rules around children's online privacy. FTC Democrat Commissioner Rohit Chopra contended that Google's collection of children's private data was "extremely lucrative" for the search giant. Google was fined $22.5 million in 2012 for violating that settlement when the FTC found it improperly used tracking cookies on Apple's Safari browser.
The Campaign for a Commercial-Free Childhood was among several groups that had asked the FTC to investigate whether Google and YouTube violated the children's privacy law.
Once the settlement takes effect, the FTC plans to "conduct a sweep of the YouTube platform to determine whether there remains child-directed content" in which personal information is being collected, Smith said.
Content identified as children's programming on YouTube's main site will not offer features like comments and notifications and won't serve personalized ads.
YouTube said Wednesday that it will limit data collection on videos made for children, even if the people watching the videos are older than 12.
In taking this approach, Google is putting much of the responsibility on video creators themselves, though the company says it will also use artificial intelligence to flag content that targets children but wasn't properly identified as such.