The US Federal Trade Commission has finalised a settlement with Google in its investigation into YouTube for violating federal kids' data privacy laws, according to two people familiar with the matter who were not authorized to discuss it on record.

The settlement - backed by the agency's three Republicans and opposed by its two Democrats - finds that Google inadequately protected kids who used its video-streaming service and improperly collected their data in breach of the Children's Online Privacy Protection Act, or COPPA, which prohibits the tracking and targeting of users younger than age 13, the people said.

The company is expected to pay a multi-million-dollar fine, but the exact amount and the contours of the FTC's settlement are unclear. The matter now rests in the hands of the Justice Department, which rarely upends the FTC's settlements with companies under its watch.

Agency spokeswoman Cathy MacFarlane and Google spokesman Chris Dale declined to comment on the investigation.

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Privacy advocates have filed years of complaints about YouTube to the FTC, alleging that some of the most popular channels on the streaming site - which is meant for people over age 13 - are directed towards children. They include videos featuring nursery rhymes, cartoons and people opening kids' toys.

For Google, the potentially small fine - compared to its staggering annual revenue in the billions - still carries broad legal risks for both the tech giant and the rest of the industry. Some of the problems raised by privacy advocates in the course of the government's YouTube investigation are shared by many of the most popular online services, including social media sites, such as Instagram and Snapchat, and games including Fortnite.

The settlement also arrives at a moment when the FTC has embarked on a new effort to rethink how it enforces COPPA. The agency's chairman, Joe Simons, announced his intentions to update the process this week, attributing the need to reexamine its rules amid "rapid technological changes." Among the FTC's concerns are websites, video games and other services that are not explicitly marketed to children but still attract large numbers of young users.

COPPA prohibits companies from collecting children's data in most circumstances or targeting them with personalized advertising, but the law applies only to websites or apps that are directed at children or have "actual knowledge" that users are younger than 13.

During the course of the FTC's investigation, Google has explored ways to change how YouTube handles children's videos, a person familiar with the company's plans previously told The Washington Post. That has included changes to the algorithms that determine which videos YouTube queues up next.