WASHINGTON (Reuters) - Big tech companies, like YouTube owner Alphabet (NASDAQ:GOOGL) among many others, would face further limits on how they use children's data to beef up profits under a proposal put out by the Federal Trade Commission on Wednesday.
The FTC said in a notice of proposed rule-making that it was considering changing the Children's Online Privacy Protection Rule to put more restrictions on when and how companies could monetize children's data.
It would also limit how companies can use notifications to nudge children to stay online. The rule affects companies which collect personal information about users under age 13.
"Kids must be able to play and learn online without being endlessly tracked by companies looking to hoard and monetize their personal data," said FTC Chair Lina Khan in a statement. "The proposed changes to COPPA are much-needed, especially in an era where online tools are essential for navigating daily life."
Since many platforms and websites on the internet are free, companies rely on advertising to pay bills. They try to tailor that advertising by using information about users which indicate what they might be interested in.
Critics have accused the platforms of failing to address mental health harms done by algorithms used by the platforms to keep young people engaged.
Under the proposed changes, companies would have to get "separate verifiable parental consent" to share most information about children with advertisers and other third parties.
The proposed changes would reinforce that companies cannot ban children from an activity if they decline to allow collection of personal data and would allow school districts to bar companies that provide educational technology for using any information it collects for a commercial purpose.
The FTC said that it would accept comments on the rule for 60 days.
Neither Alphabet nor Meta (NASDAQ:META) immediately responded to a request for comment.