The COPPA Impact?

The Children’s Online Privacy Protection Act of 1998 (COPPA) is a United States federal law, located at 15 U.S.C. §§ 6501–6506.

Wikipedia

The inspiration for this week came from a Facebook post:

COPPA is ruining everything. My youtube channel i watch for family friendly videos, has quit. My YouTube channel I rely on for toy unboxing and reviews, to buy gifts for my grandchildren, quit. My youtube channel that I rely on for gaming reviews, quit. The channels I subscribe to for Kids videos for my grandchildren, quit. People who don’t understand technology, have no business making the laws that govern, technology. So, now there will be no more child friendly videos on YouTube, so now if a child loads YouTube, their only option is adult content… WTG, congress, just when I thought you couldn’t be any more ignorant, you’ve proved me wrong… Idiots!!! ~END OF RANT

Point taken, but – knowing me – I now had to figure out the why.  Why has a law that’s been on the books for some nineteen years suddenly causing angst for the masses?  I mean, this was never an issue under prior administrations (Clinton, Bush II or Obama). So what gives?  Well in September, YouTube was fined $170 million by the FTC because they “illegally collected personal information from children without their parents’ consent”.  As part of the settlement, YouTube agreed to implement a system of checks and balances which puts much of the onus (and liability) on content creators.  Felix ‘PewDiePie’ Kjellbergd, a top ranked YouTuber puts it this way, “content creators can be sued for violating COPPA regulations. “What? Why? That makes no sense… control your children please” he said, clearly disappointed with the fact he can be punished for children viewing his content, and for his content being automatically flagged as child-friendly even if they aren’t.

So my response was, “It’s probably more appropriate blaming the FTC, not Congress. COPPA has been the law for almost 20 years. In 2019, the FTC decided to step up the enforcement actions, resulting in your turmoil.”   This particular thread continued the rant blaming Congress or even Satan.

To be clear, the FTC consists of five members, three Republican and two Democratic – all appointed by President Trump and confirmed by the Senate in April 2018.  These are the Chair, Joe Simons (R), Christine Wilson (R), Noah Phillips (R), Rohit Chopra (D) and Rebecca Slaughter (D).  The FTC approved this action on a party line 3-2 vote.  The nays were not altruistic – they only wanted stiffer penalties.  As an aside, I don’t see ‘Satan’ being confirmed – unless as a euphemism for one (or both) of the parties.

The reality is that COPPA was effective April 21, 2000 almost five years prior to YouTube’s launch (February 14, 2005).  Other than by regulation (rulemaking), I was unable to find any amendment or act to address or update the law given the technological advances over the past two decades.  The most recent effort to update COPPA is S.748 introduced by Sen. Markey (D-MA) and co-sponsored by Sen. Hawley (R-MO). This bill remains in committee and unless amended, does not address this particular issue.  A classic tale of technology outpacing intelligent oversight.

As the FTC is notoriously underfunded, one has to wonder if part of the motivation is collection of the fines.  Regardless, to sew this up in a manner befitting a financial blog, this is not the first fine levied and probably won’t be the last.  Companies targeted include, Devumi, LLC (falsifying social media influencer clout – involving LinkedIn, YouTube and Twitter), iBackPack of Texas, LLC (fraudulent acts involving Kickstarter and Indigogo), TicTok (COPPA violation) and more.  Separately, EPIC (non-profit research center) conducts investigations and agitates for reform (includes the likes of Amazon, VTech, Mattel and others).  The same logic is applicable to gaming and vLogs.

Bottom line – the differentiation between child targeting and child attractive is littered with many shades of gray.  Possible examples being channels reviewing custodial accounts for minors or budgeting for children. Be prepared to lose advertising revenue if flagged as child appropriate or perhaps face consequences if classified improperly.  Maybe the best course of action is to follow YouTube’s advice, “Consult a lawyer”.

From an investor’s point of view, the financial impacts are likely negligible – particularly if the ongoing risks are offloaded to the creators.  The biggest downside I see are user discontent (evidenced by the Facebook post above) and headline risk if a content creator is fined by the FTC.

Any thoughts?

Musings – June 22 version

Monday morning delivered the news of a merger announcement between two of my banks. It’s not often I get to play both sides of a deal, so I have to enjoy this one. PB was a hold in my portfolio representing about 1.7% where LTXB was a buy having risen to 1.8% on its’ way to a 3% maximum. My confidence was so bullish that LTXB was my one entrant in Roadmap 2 Retire‘s 2019 Contest. My confidence was inspired by Kevin Hanigan’s (LTXB President & CEO) response on the Q2 2018 Earnings call (July 18, 2018) response in the Q&A on the M&A topic, “We are trying to position the franchise to be the prettiest girl at the dance, whether we’re a buyer or a seller. And I think we’ll soon be a whole lot prettier, if not the prettiest girl at the dance.

Pretty they became as PB is paying 0.528 shares and $6.28 cash for each LTXB share. I plan to vote in favor of the transaction (on both sides), pocket the cash and sell the new shares – retaining the old. Moral to the story – you never know the gem you’ll find embedded in earnings calls.


My initial take with Facebook’s Libra Cryptocurrency is that it’s intriguing, plausible but comes with contradictions. Now – similar to the Mueller report – I’m still digesting the details, but the first two to jump out at me were:

  • Envisioned both as a Stablecoin (tied to a basket of fiat currencies) and a viable alternative to the unbanked masses, is to a degree, an oxymoron as I doubt the majority of the unbanked are versed in currency exchange fluctuations which could have either a positive or negative impact to their wealth.
  • The white paper addresses a goal of social goodness through ethical actors, yet a cursory review of the Founding Members reveals the following:
    • PayU (part of Naspers which had a controversial move from South Africa to the Netherlands – socially responsible?)
    • One founder is Thrive Capital – a VC firm run by Joshua Kushner (Jared’s brother), which would be a potential question mark worthy of further investigation

My interest lies more in the unnamed banks which will be holding all these low cost deposits, and I’m sure there will be more to follow …


The final point this week is on tariffs. Unless a country is self-sufficient, trade is not a zero sum game. There will be surpluses here and deficits there, the goal being all is basically even when viewed on a multilateral basis. My thinking is that the president has been one-upped in the trade war he started. If a measure of greatness is the wealth of a country, perhaps the campaign slogan should be “Making America Irrelevant Again“. China’s reaction (in the long game) to the tit-for-tat brinkmanship has been to reduce tariffs on other country’s goods when retaliating against US tariffs. Good luck getting these markets back …

Some Random Meanderings

Now that I’ve presented my 2019 game plan and my positioning moves planned for the last quarter, the time is ripe to see the strategies embraced by others.   First off the blocks was Credit Suisse with a projection of an 11% upside with some volatility.  I can’t disagree with the answer but question the methodology.  Their belief is the rise will mainly be on the backs of investors willing to pay up for quality (margin expansion).  My belief is that it will be riding the back of productivity increases as a result of the tax plan.  At least we both recognize that the Y/Y EPS growth rate is generally not sustainable.

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2015: What Went Right

Yesterday I published a post where I referenced an article by Bespoke Investment Group. During this season of reflection of the past year and anticipation of the one to come – aka goal setting – I figured further analysis of their article and its relationship to the DGI community might be warranted.

First I need to address the caveats:

  • Only publicly disclosed data culled from portfolios in my Blog Directory were used. If your blog is not listed, your data was not included.
  • My data only reflects a snapshot in time. Once entered in my database I generally make no updates.
  • I make no guaranty as to the accuracy of the data either through input errors, processing errors, or the legitimacy of the source data. Meaning, use at your own risk – or you get what you pay for.

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