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In a recent settlement with the Federal Trade Commission (FTC), Microsoft has agreed to pay $20 million to US federal regulators for unlawfully collecting data on children who created Xbox accounts. The settlement, reached on Monday, also includes enhanced protections for young gamers.
The FTC discovered that Microsoft violated the Children's Online Privacy Protection Act by failing to inform parents about its data collection practices. Specifically, Microsoft did not obtain proper parental consent and retained personal data of children under 13 for longer than necessary for accounts created prior to 2021.
To use certain services, Xbox users are required to create an account, during which information such as full name, email address, and date of birth is collected. However, Microsoft did not prompt parental permission until after obtaining additional personal details like the child's phone number.
Between 2015 and 2020, Microsoft retained data from the account setup process for extended periods, even when parents did not complete the procedure. The company also neglected to inform parents about the extent of data collection, including the distribution of user profile pictures to third parties.
In response to the settlement, Microsoft's Dave McCarthy, CVP of Xbox Player Services, expressed regret for not meeting customer expectations and committed to complying with the order. McCarthy emphasized Microsoft's dedication to improving safety measures, privacy, and security for the community.
As part of the settlement, Microsoft will implement new safety measures for children, including the establishment of a system to delete all personal data within two weeks if parental consent is not obtained.
The settlement agreement requires approval from a federal judge before it can take effect. This development follows a similar action taken against Amazon last week for retaining sensitive data, including voice recordings of children, leading to a $25 million settlement payment. Additionally, Amazon's Ring doorbell camera unit agreed to a $5.8 million payout for granting employees unrestricted access to customer data
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