Google will pay $170 million to settle a Federal Trade Commission complaint that its YouTube subsidiary illegally collected children's personal information, the agency announced Wednesday morning.

The big picture: The FTC touted the settlement, details of which had circulated widely last week, as a record-breaking penalty that would shape YouTube's future behavior. But critics — including the FTC's two Democratic commissioners — argued that both the size of the fine and accompanying new restrictions on the company's behavior don't go far enough to protect the public, Axios' Scott Rosenberg writes.

Details: The FTC found that YouTube's tracking of underage users violated provisions of the 1998 Children's Online Privacy Protection Act (COPPA) because the company failed to notify users of child-directed channels about the tracking and obtain parental consent.

• Under a consent decree that is part of the settlement, YouTube will be required to build a system for "channel owners to identify their child-directed content" so YouTube can comply with COPPA rules.

What they're saying: "This settlement achieves a significant victory for the millions of parents whose children watch child-directed content on YouTube," FTC chairman Joseph Simons and commissioner Christine Wilson wrote in a release. "It also sends a strong message to children's content providers and to platforms about their obligation to comply with the COPPA Rule.

"We believe the significant monetary penalty, coupled with the far-reaching conduct relief, is almost certainly better than what we would achieve in litigation. Importantly, the relief for consumers is immediate, rather than after years of litigation."

The $170 million penalty "is almost 30 times higher than the largest civil penalty previously imposed under COPPA," Wilson notes.

Yes, but: That's still small compared with the tens of billions Google earns in revenue annually, and critics of the settlement argue that it won't serve as as real deterrent to the company and its peers.

• Similar criticisms arose in July when the FTC announced its much larger $5 billion settlement with Facebook for privacy violations.
• In a dissenting statement, commissioner Rohit Chopra argues: "The Commission repeats many of the same mistakes from the flawed Facebook settlement: no individual accountability, insufficient remedies to address the company's financial incentives, and a fine that still allows the company to profit from its lawbreaking. The terms of the settlement were not even significant enough to make Google issue a warning to its investors."

What's next: The settlement, which also would conclude a parallel inquiry by New York state, must be approved by a federal district court judge.

Go deeper: For tech giants, profits far outweigh fines

No longer content to let Washington be the sole arbiter of antitrust issues, a number of states are stepping up to rein in tech companies.

Driving the news:

• Republican state legislators in California are introducing a resolution later today urging state Attorney General Xavier Becerra to work with counterparts in other states to explore how best to curb what they call the "monopolistic power" of large tech companies.
• As reported by the Washington Post on Tuesday, a number of states are close to opening an investigation of Google, with an announcement likely next week.

Why it matters: The move comes as states are increasingly frustrated with a lack of federal action on both the antitrust and privacy fronts.

What they're saying:

• California Assemblyman Jordan Cunningham: "Federal antitrust laws are ill-equipped to take on modern monopolies that quash competition and innovation without increasing prices... It is our hope that Congress continues to push forward, but we need action here at the state level as well."
• Common Sense Media CEO James Steyer: "The imbalance of power in tech is not just bad for business, it's bad for our kids.... The well-being of our kids is at stake and policymakers need to act now to hold these companies accountable."
• Google: "Google's services help people every day, create more choice for consumers, and support thousands of jobs and small businesses across the country. We continue to work constructively with regulators, including attorneys general, in answering questions about our business and the dynamic technology sector."

Google on Tuesday released the latest version of Android, known as Android 10, making it available for Pixel owners.

Why it matters: Google's annual release brings a number of new features, including greater on-device machine learning abilities, dark mode and support for foldable devices.

• There are also new privacy features, such as the ability to share location information with an app only while it is running.

And while Android phone makers are known for being slow to adopt new releases, Xiaomi and Essential both announced they are also ready with updates to Android 10 for some customers.

Facebook on Tuesday announced a new policy for gaining user consent to apply facial recognition to photos on the service, while also expanding its use of the technology.

• The feature was initially only used to help suggest possible friends to tag in a photo, but Facebook says that, with users' permission, it will now also use face recognition to help prevent people from using your photos fraudulently.
• Facebook said users will also be asked whether they want to turn on facial recognition or leave it turned off.

Our thought bubble: At first, Facebook used facial recognition to power a single feature — automatic photo tagging. By expanding its use beyond that single feature, Facebook could be greasing the wheels for even greater use down the road.

Meanwhile: Facebook says the Homeland Security Department's plan to create fake profiles to monitor foreigners looking to enter the country would violate company rules.

On Tap

• Mobile Future Forward takes place near Seattle.

Trading Places

• Kelly Born is joining Stanford's Cyber Policy Center as executive director.
• John Stankey, who runs AT&T's WarnerMedia unit, is adding new overall roles at AT&T, adding the COO and president titles.
• The Telecommunications Industry Association has hired Patrick Lozado as director of global policy.

ICYMI

• Podcast startup Himalaya may have never had $100 million in VC funding (Axios)
• A profile of Denmark's Casper Klynge, the first ambassador to the U.S. tech industry. (NYT)

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