Microsoft has been fined a staggering $20 million by the Federal Trade Commission for illegally collecting personal information of children through Xbox systems. The company has been facing several issues with the FTC, including its ongoing struggle to acquire Activision Blizzard. Data collection has become a significant concern for both the public and the government, with many tech giants facing scrutiny over mishandling user data. From TikTok bans to Facebook's admission of fault, it appears that numerous websites and apps are resorting to unethical practices to profit from the data economy. Therefore, even Microsoft, one of the largest and most established tech companies, is now being penalized for violating privacy laws by gathering information from young Xbox players.
Microsoft has been found to violate COPPA, the Children's Online Privacy Protection Act, by collecting data from accounts owned and operated by minors without obtaining consent from their parents or guardians. The Federal Trade Commission (FTC) released a statement on its website confirming the violation and expressing hope that the imposed fine will lead to stronger protections for children on the Xbox platform. Microsoft has previously clashed with the FTC, even accusing the agency of breaching the US Constitution during a lawsuit concerning the Activision Blizzard acquisition. In response to the fine, Xbox expressed regret for the inadequate safeguarding of children's data and promised to implement more responsible practices in the future.
It is highly questionable how Microsoft, a company that has been aware of the Children's Online Privacy Protection Act (COPPA) since the launch of the original Xbox in 2001, could have violated these regulations. The Federal Trade Commission (FTC) alleges that from 2015 to 2019, Microsoft did not require parental involvement in the creation of Xbox accounts until after children had provided all necessary information, including a pre-checked box that allowed advertisers to access their information. It is worth noting that the FTC has previously investigated Sony, Microsoft's biggest video game competitor, for its acquisition of Bungie. With Microsoft's revenue nearing $200 billion in 2022, a $20 million fine may not have a significant impact, leading some to question if it is more of a symbolic gesture than a meaningful penalty. To put it into perspective, Microsoft's attempted buyout of Activision Blizzard is valued at $68.7 billion, making the $20 million fine a mere 0.029% of the total cost.
Source: Federal Trade Commission
