On June 6, Microsoft agreed to pay $20 million to settle litigation brought by the United States government the day before. The allegations in the case involve violating children’s privacy by illegally collecting personal information using the company’s Xbox Live service.
According to the Federal Trade Commission (FTC), Microsoft violated the law by not telling parents how much information it was gathering from children under the age of 13. That info included photos that kids could share of themselves with an account profile, audio or video recordings, and their real names.
Xbox Live kept activity logs of player activities on the platform. Microsoft was accused of maintaining years of personal information of children who never completed the signup process. The tech giant, based in Redmond, WA, required anyone using this service to submit their name, age information, and email address.
The FTC alleged that Microsoft was aware it was collecting information about children and retaining that data without permission.
Microsoft Knew the FTC Lawsuit Was Likely Coming
Microsoft offered a simple statement regarding the FTC’s lawsuit regarding their data collection practices.
“We recently entered a settlement with the 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.”
The violations alleged by the FTC involve the Children’s Online Privacy Protection Act. In addition to settling the lawsuit for $20 million, Microsoft committed to additional measures.
- The company agreed to delete the personal information it collects from children if the individual doesn’t complete the registration process.
- Third-party publishers will be told when users could be a child, ensuring these agencies have enough notice to comply with federal law.
- Transparent information about how parents can stop their children from accessing inappropriate content or having their data collected will be more readily available.
Microsoft noted that a data retention glitch was responsible for the issue that brought the FTC lawsuit. They promised to improve systems to ensure parental consent is available for users under age 13.
What the Settlement Means for Xbox Gamers
After the settlement, Microsoft updated its account creation process. Parental consent is mandatory for children under the age of 13. In the coming months, gamers under this age with a profile created before May 2021 will need to reverify their information.
The rest of the gaming process should remain unchanged, especially for teens and adult gamers.
This settlement comes during a time when Microsoft is attempting to stay competitive with its gaming division. The company is currently trying to acquire Activision-Blizzard in a $69 billion deal, although US regulators recently moved to block this deal.
The settlement over data privacy violations provided enough concessions, including striking licensing deals to ensure customers continue to have access to specific games, for the European Union to approve the sale. Regulators in the UK and US are continuing to pursue litigation that blocks this deal from occurring.
Several other companies have faced similar lawsuits in recent years, including Alphabet, Amazon, and ByteDance Ltd.