Microsoft will pay $20 million to resolve US government claims that the tech company improperly collected personal information about minors through its Xbox Live gaming service, violating their right to privacy.
According to the Federal Trade Commission (FTC), Microsoft allegedly disregarded the law by neglecting to inform parents of the full scope of data it collected from children under the age of 13.
On a lawsuit filed on Monday, the FTC claimed that this information included the knowledge that minors may post pictures, videos, and audio recordings of themselves on their user profiles, as well as their true identities and activity logs from the platform.
“Even when a user indicated that they were under 13, they were also asked, until late 2021, to provide additional personal information including a phone number and to agree to Microsoft’s service agreement and advertising policy, which until 2019 included a pre-checked box allowing Microsoft to send promotional messages and to share user data with advertisers,” the FTC said in a release.
In a statement, Microsoft said: “We recently entered into a settlement with the U.S. Federal Trade Commission (FTC) to update our account creation process and resolve a data retention glitch found in our system. We are committed to complying with the order.”
Parents have some control over what other users see when their children’s accounts are used. For instance, according to the FTC, Xbox Live’s default settings limit the users that kids can communicate with. However, the agency claimed that other default settings make it far easier for minors to access games and apps from third parties.
The FTC claimed that Microsoft violated the Children’s Online Privacy Protection Act (COPPA) by failing to adequately warn parents about the data that the firm was gathering from children and how it was being utilized.
Beyond the monetary fine, Microsoft agreed to take a number of other actions in order to address the charges.
If children fail to complete the account registration procedure, Microsoft has promised to destroy any personal information it has about them.
It also agreed to tell third-party game publishers when a user may be a child; effectively putting the third-party publishers on notice to comply with COPPA in handling the user’s information.
The agreement was reached at the same time that the FTC was contesting Microsoft’s proposed $69 billion acquisition of the leading video game developer Activision-Blizzard, which would make Microsoft the third-largest game publisher in the world and give it control over well-known franchises like “Call of Duty” and “World of Warcraft.”
According to US and UK officials, Microsoft’s acquisition might give it anti-competitive dominance over the games industry by allowing it to withhold titles from competitor platforms, especially in the burgeoning cloud gaming market. Microsoft has made licensing agreements with other businesses to allay the worries and guarantee that Activision games would still be available to their customers after the merger is closed.
Those concessions have convinced the European Union to approve the deal, but litigation to block the deal involving US and UK regulators remains ongoing.