The Federal Trade Commission redacted the dissent of one of its own commissioners in a $170 million settlement with Google over violations of child privacy laws. The incident reflects Google’s overwhelming power to dictate government actions, even when the company is at fault.
The settlement involves YouTube, a Google company, collecting information from children who watched videos on special child-focused sections of the site, without getting parental consent. The information, stored in cookies that identify what content the children watched on YouTube, was used to track them across the Web and serve them targeted advertising. This conduct is illegal under the Children’s Online Privacy Protection Act (COPPA), which requires parental consent for children under 13.
Rohit Chopra and Rebecca Kelly Slaughter, both Democrats, voted against the settlement, but were overridden by the three Republican appointees. Chopra’s dissenting statement notes that this is the third FTC sanction against Google for privacy violations since 2011, and he condemns the lack of individual accountability, inadequate steps to prevent future misconduct, and a fine that fails to even fully recoup what Google gained from the activity. “Illegally harvesting children’s data was extremely lucrative,” Chopra writes.
But we don’t know how lucrative, because Chopra’s description of the dollar amounts involved were redacted.
Chopra asserts that Google will still profit from the COPPA violations, suggesting that the company’s take from targeted advertising on children was greater than the $170 million fine. The COPPA statute allows for forfeiture of ill-gotten gains and potentially billions of dollars in fines, so there’s no excuse for enabling profit-taking from illegal behavior. Instead, the fine was so small that it didn’t even trigger a warning from Google to its investors under the securities laws.
“As part of the evidence I evaluated in this investigation,” Chopra writes, “I reviewed the revenues generated from behavioral advertising on (redacted), which totaled (redacted) million during the period from (redacted) to (redacted).” He extrapolates this out across a redacted figure, presumably all of YouTube’s channels targeting children, and factored in a redacted growth rate. “We yield ill-gotten gains in excess of (redacted) million.”
Chopra also states that the FTC should have included a multiplier, to incorporate Google’s avoided compliance costs, the use of the data at other Google properties, the increased value to its predictive algorithm by including data it shouldn’t have collected, and other benefits. He cited a 2012 action against Google, when the FTC found unjust gains of $4 million and fined Google $22.5 million, a figure 5.625 times the earnings from the violation. “Had we used a similar multiplier, that would result in a target of (redacted) billion,” Chopra writes.
Despite the redaction, the passage actually yields a powerful clue. As the American Action Fund’s Will Rinehart points out, if a multiplier of 5.625 makes the fine at least $1 billion, then we can assume that Chopra’s calculations found at least $177.7 million in ill-gotten gains. That alone is more than the $170 million fine, and it’s a lower bound on Chopra’s figures.
Unfortunately, that’s all we have to go on. Either Google was somehow able to intimidate the FTC into redacting a commissioner’s figures about how much money the company made from ads targeted at children over the time period at issue in the case (even that time period is redacted and non-public), or the three Googlefied commissioners decided they didn’t want to offend a mega-company they’re supposedly charged with regulating.
Reading the consent order in the settlement, you find that Google didn’t have to admit or deny the allegations in the complaint. The consent order doesn’t appear to require the FTC to withhold information about Google’s business practices. So the FTC may have given Google a freebie, censoring the agency’s own commissioner to protect Google from the bad publicity of a settlement that allows the tech giant to keep some substantial amount of illegal earnings. Because this preserves the FTC’s majority from the shame of having to disclose that they fined Google less than what Google earned from the violation, they were probably all too happy to redact.
For their part, the majority statement on the settlement describes Chopra’s calculations as “highly speculative,” while claiming that the fine does exceed the ill-gotten gains. But by redacting Chopra’s data, the majority gives the public no opportunity to judge the two claims.
This kind of constraint put on dissenting commissioners appears to be part of a pattern of emboldened corporate offenders dictating terms to the government. A very strange case from the Commodity Futures Trading Commission (CFTC) illustrates the point.
Food companies Kraft and Mondelez were found to have manipulated wheat markets in 2011 by excessively buying futures contracts to drive down the price. The CFTC fined the companies $16 million, and announced the fine last month. But Kraft and Mondelez sued the CFTC for contempt, arguing that its press release divulged information that was supposed to be kept secret. Kraft and Mondelez secured an agreement that restricted what the CFTC could say about the case. The CFTC had to pull the press release from its website.
The statements Kraft and Mondelez took issue with were fairly anodyne comments from CFTC Chair Heath Tarbert, who said that market manipulation “inflicts real pain on farmers” and “hurts American families by raising the costs of putting food on the table.” Kraft and Mondelez also objected to comments by commissioners Dan Berkovitz and Rostin Behnam, who gave their opinions on the market manipulation before the public vote.
If companies that violate the law can censor even boilerplate commentary, who’s really driving the process: the enforcers or the corporate offenders? And if there’s no gag order present, why should the majority of a federal enforcement agency be allowed to censor opposing viewpoints from duly appointed commissioners?
The paltry fine for Google’s misconduct toward children is bad enough. “Just a few weeks after the FTC gave Facebook a sweetheart deal, they’re now giving Google the same family and friends treatment,” wrote Representative David Cicilline (D-RI), chair of the House Subcommittee on Antitrust, Commercial and Administrative Law, in a statement. But redacting the key information that would reveal the inadequacy of the fine, which doesn’t even cover the rewards from the misconduct, takes the backscratching to an entirely new level.