On the last day of the year a federal judge officially approved a $10 million settlement between the Walt Disney Company and the U.S. Federal Trade Commission (FTC), resolving allegations that the entertainment giant systematically violated the Children’s Online Privacy Protection Act (COPPA).
While $10 million is a rounding error for a corporation of Disney’s size, the settlement represents a landmark shift in how regulators hold “content giants” accountable for their behavior on third-party platforms like YouTube.
The era of “passing the buck” on data privacy is officially over. For years, major content creators operated under a convenient legal friction: they provided the content, but the platform (YouTube) handled the data. Disney’s $10 million settlement with the FTC, finalized as we enter 2026, shatters that defense.
The core of the complaint wasn’t just a technical glitch—it was a corporate policy that prioritized ad revenue over the digital safety of millions of children.
The “Channel-Level” Shortcut
To understand why the Department of Justice stepped in, one must look at the mechanics of YouTube’s compliance tools. Since 2019, YouTube has required creators to tag videos as “Made for Kids” (MFK) or “Not Made for Kids” (NMFK). When a video is tagged MFK, YouTube disables personal data collection, comments, and—most importantly—targeted advertising.
According to the FTC, Disney chose a shortcut: Channel-Level Designation.
Disney allegedly set entire channels to “Not Made for Kids” by default. This meant that when they uploaded child-directed content—including clips from massive franchises like Frozen, Toy Story, Mickey Mouse, and The Incredibles—to those channels, the videos were automatically treated as adult content.
-
The Depth: This “mislabeling” wasn’t accidental. By keeping these videos in the NMFK category, Disney and YouTube were able to collect persistent identifiers (data that tracks a user across the web) and serve highly lucrative targeted ads to children under 13.
-
The Revenue Loop: Disney receives a significant portion of the advertising revenue generated by its YouTube videos. By failing to check the MFK box, the company essentially “enabled” a surveillance-based advertising model on an audience that is legally protected from it.
Ignored Warnings and “Downstream Harms”
Perhaps the most damning aspect of the complaint is that Disney was allegedly warned. In 2020, YouTube itself identified over 300 Disney videos that were clearly child-directed and manually switched their labels to “Made for Kids.” Despite this massive corrective action by the platform, the FTC alleges that Disney continued its practice of mis-designating content at the channel level.
The government’s case highlighted that the harm went beyond just data collection. Because the videos were tagged as “General Audience,” children were exposed to:
-
Unrestricted Public Comments: Exposing minors to potential “rabbit holes” of toxic or inappropriate interactions.
-
Autoplay Traps: The algorithm, believing the viewer was an adult, would autoplay into “Not Made for Kids” content, leading children away from safe environments.
The “Age Assurance” Pivot: A Glimpse into 2026
The settlement includes a forward-looking provision that signals where the FTC is moving next. Disney is now mandated to implement a “Video-Review Program”—a 10-year requirement to manually audit every video it posts to YouTube to ensure correct designation.
However, there is an “escape hatch” in the order: Age Assurance Technology.
The FTC stated that Disney could be relieved of this manual review if YouTube implements reliable age-verification technologies that can determine the age or age range of all users. This is a massive “thumb on the scale” from the FTC, essentially telling the industry: If you don’t want to be fined for mislabeling content, you need to start verifying who is behind the screen.
Why This Matters Now
The Disney settlement marks a transition from the FTC’s 2019 era—where it went after the platforms (fining Google $170 million)—to the 2026 era, where it is going after the content owners.
As companies race to use their vast libraries of content to train AI or fuel new streaming platforms, the “wider net” mentioned in recent privacy laws is tightening. The message to the C-suite is clear: If your intellectual property attracts children, you are a “children’s service” in the eyes of the law, regardless of which platform you use to distribute it.
For Disney, $10 million is a small price to pay. But for the rest of the media industry, the “Disney Precedent” means that “leaving a box unchecked” on a YouTube upload is no longer a clerical error—it’s a federal offense.
