$20M Microsoft settlement with FTC resolves Xbox Live child data collection lawsuit

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Microsoft Xbox data collection settlement overview: 

• Who: Microsoft has reached a settlement with the Federal Trade Commission.
• Why: The tech giant has agreed to pay $20 million to settle allegations it illegally collected the data of children under 13 on Xbox Live.
• Where: Microsoft Xbox data collection settlement is in a Washington federal court. 
• What are my options: Consumers looking for alternatives to XBox Live may be interested in products from GameFly.

Microsoft has agreed to pay $20 million to settle allegations it illegally collected the data of children under 13 years old through Xbox Live.

In a proposed order filed June 5 in a Washington federal court, it was revealed that Microsoft Corp. had agreed to pay a civil penalty of $20 million to the Treasurer of the United States after it was hit with a lawsuit by the Federal Trade Commission (FTC) alleging it breached the Children’s Online Privacy Protection Act (COPPA).

The FTC alleges the tech giant illegally collected the personal data of children under 13 on Xbox Live without obtaining parental consent, and then put that data at risk through its storage. 

In its complaint, also filed June 5,  the FTC alleged that Microsoft broke the law by collecting personal information from children who signed up to its Xbox gaming system without notifying their parents or obtaining their parents’ consent. Microsoft then allegedly illegally retained that information, also without consent, the complaint states. 

The FTC alleged that from 2015 until at least October 2020, Microsoft indefinitely retained personal information from about 10 million individuals, including children, when users created Xbox Live accounts.

As part of the settlement, Microsoft neither admits nor denies the allegations, the order states.

Microsoft to increase data protections for children 

Microsoft will also increase protections for children as a result of the settlement, including deleting personal data from children after two weeks if it fails to obtain parental consent.

The company must also start indicating that the user is a child under age 13 when disclosing personal information from a child Microsoft account to any video game publisher.

Meanwhile, in December, the Federal Trade Commission (FTC) made another move involving a gaming company, seeking to block a $68.7 billion deal that would see Microsoft Corp. acquire game developer Activision Blizzard, stating the move could harm video game market competition.

What do you think of this settlement with Microsoft? Let us know in the comments! 

The FTC is represented by Megan Cox and Peder Magee with the FTC’s Division of Privacy and Identity Protection.

The FTC Microsoft settlement is United States of America v. Microsoft Corp., Case No. 2:23-cv-00836, in the U.S. District Court for the Western District of Washington.

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