(Bloomberg) -- Microsoft Corp. agreed to pay $20 million to settle a US Federal Trade Commission claim that the company illegally collected data from children who signed up to use its Xbox gaming system.
The Redmond, Washington tech giant required anyone using the Xbox Live service to register with a name, email address and age information. But even when the company was aware of users under age 13 it continued to collect and retain data in violation of a US kids’ online privacy law, according to the FTC.
Microsoft blamed a “data retention glitch” and promised to improve its systems.
“In addition to our existing multifacted safety strategy, we also plan to develop next-generation identity and age validation — a convenient, secure, one-time process for all players,” the company said in an emailed statement.
In a blog post, Microsoft’s Dave McCarthy said users under age 13 who created accounts before May 2021 will need to reverify they have parental consent to use Xbox.
With the settlement, Microsoft joins the ranks of dozens of other companies including Amazon.com Inc., Alphabet Inc.’s Google and ByteDance Ltd’s TikTok who have faced FTC penalties for collecting or keeping data on children without parental consent.
As part of the settlement, Microsoft agreed to delete within two weeks any information collected about kids without parental consent and to notify any video game publishers that seek personal information if users are children.
Microsoft’s Minecraft — a game franchise popular with children where users create 3D worlds with Lego-like blocks — has 141 million active players worldwide, according to Statista.
(Updates with additional Microsoft comments in fifth paragraph)
©2023 Bloomberg L.P.