Disney to Pay $10M in FTC Settlement Over Child Privacy Violations

The Walt Disney Company (DIS) has agreed to a $10 million settlement with the Federal Trade Commission (FTC) to resolve allegations of violating children's privacy laws on YouTube. The news had a muted impact on the company's stock, which saw a slight dip of approximately 0.3%.

The settlement concludes an FTC investigation into Disney's handling of content on the popular video platform. , Disney failed to correctly designate certain videos as being "made for children." This misclassification allegedly allowed for the collection of personal data and the serving of targeted online advertising to young viewers, which is a violation of the Children's Online Privacy Protection Act (COPPA).

This case represents the first time a major YouTube content provider has settled with the FTC on such charges since the agency's landmark 2019 case against YouTube and its parent company, Google. In response to the allegations, Disney acknowledged what it described as an "administrative error" in how it categorized some videos uploaded during the pandemic.

As part of the agreement, Disney will not only pay the $10 million penalty but will also implement a new "Audience Designation" program. This initiative is designed to ensure all uploaded content is correctly categorized to comply with federal regulations moving forward. While the financial penalty is minor for a corporation of Disney's size, the settlement underscores the that major media and technology companies face regarding the protection of children's data online.

The minimal market reaction suggests investors are not overly concerned with the financial impact of the fine, likely viewing it as immaterial to Disney's overall revenue and robust cash flow. However, the event highlights the ongoing operational and reputational risks associated with navigating the complex landscape of digital content regulation, an issue that remains a key focus for covering the media sector.