The United States Department of Justice reported on Monday that Microsoft will pay a fine of $20 million for collecting and retaining personal information from children who use the Xbox Live service. The company agreed to pay a civil penalty for violating various points of the children’s privacy law and will also have to serve injunctive relief to resolve the allegations.

Violation of the Children’s Online Privacy Protection Act (COPPA)

According to the US government, Microsoft violated the Children’s Online Privacy Protection Act (COPPA) through its Xbox Live service, which is used to connect online through the Xbox brand of consoles. In a lawsuit filed in the US District Court for the Western District of Washington, the United States alleges that Microsoft knew that certain users were children but continued to collect personal information, such as phone numbers.

Incomplete Notice to Parents

The complaint alleges that while Microsoft did provide some notice to parents, it came after the information was collected and was incomplete. Principal Deputy Attorney General Brian Boynton said in a statement that it is essential for online companies to provide full and timely disclosures about their information collection practices before collecting personal information from children so that parents can make informed decisions.

Clear Communication and Compliance with Federal Statutes

This settlement requires Microsoft to communicate clearly with parents about their children’s data and establish procedures to monitor Microsoft’s compliance with federal statutes regarding children’s online privacy. The company must take necessary measures to ensure that such violations do not occur in the future.

Concluding Thoughts

The fine imposed on Microsoft emphasizes the importance of companies adhering to the children’s privacy law. The company must take necessary action to avoid such violations from happening again in the future. The settlement regulates Microsoft’s practice of collecting and handling personal information, ensuring compliance with federal statutes and notifying parents before collecting personal information from children.