Microsoft to Pay $20 Million Settlement for Violating Children’s Privacy on Xbox, Implements Enhanced Privacy Measures.

• Microsoft (NASDAQ: MSFT) has reached a settlement with the US Federal Trade Commission (FTC) regarding charges of violating children’s privacy through its Xbox gaming system. Under the terms of the settlement, Microsoft will pay a fine of $20 million. The company was accused of collecting personal information from children who signed up for Xbox without obtaining parental consent or notifying parents, thereby contravening the Children’s Online Privacy Protection Act (COPPA).
• The FTC’s Bureau of Consumer Protection emphasized that children’s avatars, biometric data, and health information are not exempt from COPPA.
• As part of the settlement, Microsoft will be required to implement enhanced privacy measures for child users of the Xbox system. The company will extend COPPA protections to third-party gaming publishers with whom it shares children’s data.
• The settlement also clarifies that the COPPA Rule covers avatars created from a child’s image, as well as biometric and health information when collected alongside other personal data.
• The COPPA Rule mandates that online services and websites directed towards children under 13 must inform parents about the personal information collected and obtain verifiable parental consent before using any such information.
• In addition to the financial penalty, Microsoft will be obligated to inform parents who have not created a separate account for their child that doing so will provide default privacy protections for their child.

Trade Suggestion:

• Given the recent settlement and the potential impact on Microsoft’s reputation, investors may want to consider monitoring the company’s stock performance closely in the coming months. The settlement highlights the growing importance of data privacy regulations, particularly regarding children’s personal information. Investors should assess the company’s ability to comply with such regulations and the potential impact on its gaming business segment. Additionally, it may be prudent to evaluate Microsoft’s efforts in enhancing privacy protections for child users and the implications for its long-term strategy in the gaming industry.