Microsoft has decided to pay $20 million to reach a settlement after it was found to be illegally collecting and retaining the data of children who signed up to use its Xbox video game console.
The Federal Trade Commission reached the settlement with the tech company on Monday, as it called for strengthening the privacy of child gamers.
However, the settlement must be approved by a federal court before it can go into effect.
What is Microsoft accused of?
The federal agency had found that Microsoft gathered the data without informing parents or obtaining their consent, and that it also illegally held onto the data for longer periods than necessary for accounts created before 2021.
These actions violated the Children’s Online Privacy Protection Act, the FTC stated.
The law mandates online services and websites directed towards children to obtain a parent’s consent and to inform the parent about personal data being collected about their child.
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“From 2015 to 2020 Microsoft retained data sometimes for years from the account set up, even when a parent failed to complete the process, the FTC said in a statement.
Microsoft’s response
In a blog post, Microsoft corporate vice president for Xbox Dave McCarthy outlined additional steps being now taken by the company to improve its age verification systems and to ensure that parents are involved in the creation of child accounts for the service.
“Regrettably, we did not meet customer expectations and are committed to complying with the order to continue improving upon our safety measures,” Microsoft’s Dave McCarthy, CVP of Xbox Player Services, wrote in an Xbox blog post.
“We believe that we can and should do more, and we’ll remain steadfast in our commitment to safety, privacy, and security for our community.”
These mostly concern efforts to improve age verification technology and to educate children and parents about privacy issues, it said.
Second tech firm to be fined in two weeks
The action follows last week’s warning to Amazon after the federal agency said that its Echo devices are collecting users’ personal information without consent.
Amazon agreed to pay $25 million after the FTC found that it had retained sensitive data, including voice recordings of children, for years.
Amazon’s doorbell camera unit Ring also agreed to pay out $5.8m after giving employees unrestricted access to customers’ data.
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