15 hours ago

Danielle KayeBusiness reporter

Reuters

The water tower at The Walt Disney Company headquarters in Burbank, California, features the character Mickey Mouse.

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

Disney had agreed to a settlement with the US Federal Trade Commission in September to resolve an inquiry into its collection of children's personal data.

The FTC had argued that, as a result of Disney's alleged failure to properly label children's videos, kids received targeted advertising and had their data collected without parental notice and consent.

The entertainment giant also agreed to create a program to comply with children's data protection laws, the US Department of Justice said on Tuesday.

"The Justice Department is firmly devoted to ensuring parents have a say in how their children's information is collected and used," Brett Shumate, an 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 has agreed to the terms initially announced in September.

The company had previously noted that the settlement is limited to the distribution of some of its content on YouTube and does not involve Disney-owned and operated digital platforms.

The agreement 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 started requiring content creators to place labels on uploaded videos that were directed toward kids.

The rule was intended to avoid targeted advertising and personal data collection on kids' content, which is banned under the 1998 Children's Online Privacy Protection Act (COPPA).

The law requires creators that make content for children under 13 to notify parents and obtain their consent before gathering personal information.

But regulators claimed that Disney did not identify certain videos - many of them uploaded to YouTube during the pandemic - as being made for 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 have been "extremely popular", the complaint stated, and viewership soared in the early months of the Covid-19 pandemic.

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

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

Disney's alleged misclassification "results in YouTube collecting personal information and placing targeted advertisements on child-directed videos on Disney's behalf," lawyers for the government alleged.