Day: December 4, 2018

Verizon-owned AOL helped advertisers track children online in order to serve targeted ads, in violation of a federal children’s privacy law, and has agreed to pay a fine of $4.95 million, New York Attorney General Barbara Underwood announced today.

“The Attorney General’s Office found that AOL conducted billions of auctions for ad space on hundreds of websites the company knew were directed to children under the age of 13,” Underwood’s announcement said. “Through these auctions, AOL collected, used, and disclosed personal information from the websites’ users in violation of COPPA [Children’s Online Privacy Protection Act], enabling advertisers to track and serve targeted ads to young children.”

In addition to paying the largest-ever fine for violating COPPA, the Verizon-owned company “has agreed to adopt comprehensive reforms to protect children from improper tracking,” the announcement said.

Verizon purchased AOL in June 2015; AOL is now part of a Verizon subsidiary called Oath, which also includes Yahoo. Verizon also operates a nationwide mobile broadband network and offers home Internet and TV services in parts of the US. Verizon has consistently fought government regulation of privacy in broadband networks. As owner of Oath, Verizon is forcing users of Yahoo services to waive their class-action rights and agree to resolve disputes through arbitration.

The attorney general investigation “examined AOL’s practices between October 2015 and February 2017,” The New York Times reported. Verizon did not admit or deny the investigation’s findings but told the Times, “We are pleased to see this matter resolved and remain wholly committed to protecting children’s privacy online.”

COPPA was enacted by Congress in 1998 and “prohibits operators of certain websites from collecting, using, or disclosing personal information (e.g., first and last name, email address) of children under the age of 13 without first obtaining parental consent,” Underwood’s announcement noted. The law was updated in 2013 to expand the definition of “‘personal information’… to include persistent identifiers that can be used to recognize a user over time and across websites, such as the ID found in a Web browser cookie or an Internet Protocol (‘IP’) address.”

The law applies to websites and online services directed at children under 13; operators of websites and online services that knowingly collect personal information from children under 13 are also covered by the law.

How Verizon violated kids’ privacy

Here’s how AOL violated COPPA, according to the NY attorney general’s office:

AOL operates several ad exchanges, including an exchange for image-based ads, referred to as “display” ads. Until recently, AOL’s ad exchange for display ads was not capable of conducting a COPPA-compliant auction that involved third-party bidders because AOL’s systems would necessarily collect information from users and disclose that information to the third parties. AOL policies therefore prohibited the use of its display ad exchange to auction ad space on COPPA-covered websites to third-parties.

Despite these policies, AOL nevertheless used its display ad exchange to conduct billions of auctions for ad space on websites that it knew to be directed to children under the age of 13 and subject to COPPA.

AOL knew the ads were directed at children in part because “several AOL clients provided notice to AOL that [more than a dozen of] their websites were subject to COPPA,” the AG’s office said. Despite that, “AOL conducted at least 1.3 billion auctions of display ad space from these websites.”

Separately, AOL “conducted at least 750 million auctions of display ad space” on hundreds of other websites. AOL knew these websites were directed at children under 13 because it had conducted an internal “review of the content and privacy policies of client websites.”

Each auction takes a fraction of a second and occurs “after a user opens a webpage that contains ad space,” the AG announcement noted. A cookie stored on a user’s computer contains information that is transmitted by the ad exchange “to entities that may be interested in purchasing ad space on behalf of advertisers.” This type of behavioral advertising targets ads at each person based on “the individual’s Internet browsing history, demographic information, or personal interests.”

AOL was guilty of still another type of violation, the AG’s announcement said. In addition to its own ad exchanges, AOL “operates a business that bids on ad space in auctions conducted by other ad exchanges.”

“Prior to November 2017, AOL’s systems ignored any information that it received from an ad exchange indicating that the ad space was subject to COPPA,” the announcement said. “Thus, whenever AOL participated in and won an auction for COPPA-covered ad space, its systems behaved as they normally did. In these cases, the company typically used user information supplied by the exchange and information the company could collect directly from the user to select and serve a targeted advertisement to the user. AOL’s collection and use of this information from users on COPPA-covered websites violated COPPA.”

AOL rep violated law to increase revenue

One AOL account manager knowingly violated COPPA in order to increase revenue, the AG investigation also found:

As described above, AOL permitted clients to use its display ad exchange to sell ad space on COPPA-covered sites, even though the exchange was not capable of conducting a COPPA-compliant auction that involved third-party bidders. AOL documents show that an AOL account manager based in New York intentionally configured at least one of these client’s accounts in a manner that she knew would violate COPPA in order to increase advertising revenue. In addition, AOL documents show that the NY account manager repeatedly represented to at least this client that AOL’s display ad exchange could be used to sell ad space to third-parties in a COPPA compliant manner. As a result of these misstatements, the client used AOL’s display ad exchange to place more than a billion advertisements on COPPA-covered inventory.

The settlement requires AOL to “establish and maintain a comprehensive COPPA compliance program” and to retain an objective, third-party expert to assess its new privacy controls.

AOL must also create new functionality for website operators that sell ads through AOL systems, allowing website operators “to indicate each website or portion of a website that is subject to COPPA.” AOL will keep that information in a database “and disclose to each third-party bidder that relevant ad space is subject to COPPA.”

“Finally, AOL has also agreed to destroy all personal information collected from children that is in its possession, custody, or control, unless such personal information is required to be maintained by law, regulation, or court order,” the settlement announcement said.

SteamedSteamed is dedicated to all things in and around Valve’s PC gaming service.  

Steam is constantly evolving behind the scenes, but the latest reorganization of the storefront’s molecules has left some developers scratching their heads. Now, if a game makes $10 million, developers have to share less money with Valve. And if it hits $50 million, even less than that.

Valve announced tweaks to Steam’s revenue sharing system in a post on Friday. Previously, all developers had to give 30 percent of their revenue to Valve. Now, if a game makes $10 million, its developer only has to toss 25 percent of earnings after that into Valve’s bottomless money abyss. If it makes it all the way up to $50 million, the developer only owes Valve a 20 percent cut of remaining sales.

“The value of a large network like Steam has many benefits that are contributed to and shared by all the participants,” Valve wrote. “Finding the right balance to reflect those contributions is a tricky but important factor in a well-functioning network. It’s always been apparent that successful games and their large audiences have a material impact on those network effects, so making sure Steam recognizes and continues to be an attractive platform for those games is an important goal for all participants in the network.”

Meanwhile, maller developers, who make up the bulk of Steam’s library, will still owe Valve 30 percent of their earnings. These developers might be lucky to sniff $1 million, let alone $10 million or more. In a marketplace where it’s increasingly difficult for even the most enterprising indies to gain a foothold, developers are bewildered by Valve’s decision to make things easier for the biggest games, which already have it easier in terms of exposure and money-making potential.

Some developers see the move as a way for Valve to keep bigger games on Steam’s platform. “Valve statement, paraphrased: ‘Don’t worry, big game productions, we’ll happily subsidize your increased income with the broken dreams of aspiring devs that fell just short of making it because they have no leverage and we don’t care,” said Vlambeer’s Rami Ismail on Twitter. “Just please don’t launch your own store.”

In recent years, an increasing number of major games have eschewed Steam to launch on publishers’ own stores—for example, Call of Duty: Black Ops 4 is on the Blizzard’s Battle.net, EA’s games release via Origin, Fallout 76 is on Bethesda’s launcher, and Fortnite is on Epic’s.

“So excited to have Caves of Qud subsidize Red Dead Redemption 2,” wrote Freehold co-founder and Caves of Qud co-designer, producer, and programmer Brian Bucklew. “I hope all of Valve’s customers are interested in having the tiny studios doing interesting things on razor-thin budgets paying for the next Fallout 76.” In a later tweet, he expanded, “This change by Valve is (presumably, clearly) specifically meant to court those games back, or prevent further flight.”

Some just don’t see the point in helping out games that are already so fiscally successful. “Steam just changed the rules so that games that make millions of dollars earn a higher % of their revenue, so the richest get richer,” said Wandersong developer Greg Lobanov. “What a slap in the face to the rest of us.”

“If Valve is willing to drop their revenue share on games that make 90% of the revenue of Steam, why not create some goodwill with indies and extend that to the 99% who make up for that last 10%?” said Hidden Folks designer Adriaan de Jongh.

On top of that, all is not well in the steamy metropolis of Algorithm City. Multiple small developers have claimed that Valve changed Steam’s game discovery algorithm in October, drawing significantly fewer eyeballs to their games’ store pages.

Grey Alien Games owner and Shadowhand developer Jake Birkett wrote a lengthy post about the issue in which he chalked up initial discovery issues to a bug that caused Steam to only recommend “some big name games instead of relevant games.” Birkett claims that Valve “quickly” fixed it, but smaller developers’ traffic from the Steam home page and “other product pages” hasn’t recovered. This is hitting some developers where they were already hurting: their pocketbooks.

“I compared full price sales before and after the October bug (being careful to avoid weeklong sales and Steam sales), and my total units sold have halved,” said Birkett.

“It is clear that Steam is favoring triple-A since Oct,” wrote NeuroVoider developer Thomas Altenburger. “All the big players are vampirizing the store, and it is very likely that you saw no indies since October in a pop-up. Since October, we have 75% less revenues.”

Simon Roth, creator of long-in-development Dwarf-Fortress-inspired simulation game Maia, finally took his game out of early access recently, only to discover that the algorithm rained all over his years-in-the-making parade. Posting a chart in which his page traffic dropped beginning in October, he said: “No doubt that cost me dearly on launch too. Great.”

While Valve at least explained its rationale surrounding the revenue share changes, it has yet to clear the increasingly murky air surrounding the discovery algorithm. Kotaku reached out to Valve for an explanation, but as of writing, the company had yet to reply.

Kotaku EastEast is your slice of Asian internet culture, bringing you the latest talking points from Japan, Korea, China and beyond. Tune in every morning from 4am to 8am.  

In Naruto, the Rasengan is a swirling chakra ball that can be held and thrown by ninja. This looks like the Rasengan but for real.

Spotted at this year’s Hack Day in Japan, this project is called micRokuro and was created by Yoshimasa Kato.

It works very well with Naruto music!

Here is a better look at the project.