In a landmark move demonstrating corporate accountability, The Walt Disney Company has agreed to pay $10 million to resolve federal allegations about improperly handling children's online privacy on YouTube.

The settlement, announced by the US Federal Trade Commission and Department of Justice, centers on Disney's alleged failure to properly label children's videos, which potentially exposed young viewers to targeted advertising without parental consent.

According to the legal filing, Disney uploaded videos to over 1,250 YouTube channels through various subsidiaries, with many becoming extremely popular during the Covid-19 pandemic. Regulators argued that by not correctly identifying child-directed content, the company allowed YouTube to collect personal information from children under 13, violating the Children's Online Privacy Protection Act (COPPA).

Brett Shumate, an assistant attorney general in the justice department's civil division, emphasized the critical nature of the settlement: "The Justice Department is firmly devoted to ensuring parents have a say in how their children's information is collected and used." The agreement involves Disney Worldwide Services Inc and Disney Entertainment Operations LLC, highlighting the company's comprehensive approach to resolving the issue.

The investigation revealed that Disney was aware of labeling problems as early as June 2020, when YouTube informed them that over 300 videos from popular franchises like The Incredibles, Toy Story, and Frozen had been reclassified. Government lawyers contended that this misclassification resulted in YouTube collecting personal data and placing targeted advertisements on child-directed videos.

As part of the settlement, Disney has committed to creating a comprehensive program to ensure future compliance with children's data protection laws. A Disney spokesperson confirmed the company's agreement to the terms initially proposed in September, noting that the settlement specifically relates to YouTube content distribution and does not involve Disney's own digital platforms.

This resolution represents a significant moment in online child protection, reinforcing the importance of transparent data practices and parental consent in the digital age. By taking responsibility and implementing stronger safeguards, Disney sets a positive example for other content creators in protecting young internet users.