Microsoft will pay$20 million to settle US Federal Trade Commission (FTC) charges that it illegally collected children's personal information without their parent's consent. FTC stated that Microsoft violated US Children's Online Privacy Protection Act (COPPA), as it collected children's personal information who signed up for its Xbox gaming system.

FTC ordered Microsoft to implement several measures to improve privacy protections for children. These include informing parents about the additional privacy safeguards provided when creating a separate account for their child, obtaining parental consent for accounts created prior to May 2021 if the account holder is still a child, establishing systems to promptly delete personal information collected from children if parental consent is not obtained, and notifying video game publishers about the user's age to ensure COPPA's protections are applied. It was also highlighted that avatars generated from a child's image and biometric and health information should be in accordance with COPPA provisions.

Microsoft's vice president for Xbox, Dave McCarthy, outlined the company's steps to improve its age verification systems and ensure that parents and children are aware of the privacy issues.