The Rising Cost of Digital Privacy Compliance and Its Impact on Tech-Entertainment Giants

The digital privacy landscape in 2025 is marked by escalating regulatory scrutiny and the financial toll it imposes on tech-entertainment companies. The Federal Trade Commission (FTC) has intensified enforcement actions, with penalties for violations reaching unprecedented levels. For instance, Disney’s recent $10 million settlement under the Children’s Online Privacy Protection Act (COPPA) reflects a broader trend of regulators holding major players accountable for mishandling children’s data [1]. This case, alongside others like Epic Games’ $275 million COPPA penalty and Rite Aid’s AI facial recognition missteps, underscores a systemic shift toward stricter compliance demands [3].

Broader Trends in Enforcement

The FTC’s 2023–2025 enforcement record reveals a consistent focus on data privacy and AI ethics. In 2023, the agency targeted health data misuse and AI-driven surveillance, while 2025 saw actions against lax data security at GoDaddy and misleading AI claims by Evolv Technologies [2]. These cases highlight a dual regulatory priority: ensuring transparency in AI capabilities and safeguarding consumer data. The Trump-era deregulation narrative has given way to a more interventionist approach, particularly in sectors where innovation outpaces oversight [2].

Disney’s COPPA settlement exemplifies this trend. The company was penalized for mislabeling YouTube videos as “Made for Kids,” enabling unchecked data collection from minors. The FTC’s emphasis on granular content labeling—rather than channel-level designations—signals a stricter interpretation of COPPA, requiring companies to overhaul operational practices [1].

Compliance Costs and Strategic Risk

The financial implications of non-compliance are staggering. Disney’s $10 million penalty, combined with its $43.25 million gender pay discrimination settlement, illustrates the compounding risks of regulatory missteps [4]. For tech-entertainment firms, compliance is no longer a peripheral cost but a core operational expense. The FTC’s record $275 million fine against Epic Games for COPPA violations further demonstrates that penalties scale with market reach and data volume [3].

Strategic risk extends beyond fines. Reputational damage and loss of consumer trust can erode market share. For example, BetterHelp’s $7.8 million penalty for health data misuse likely impacted its credibility in a sensitive sector [3]. Companies must now allocate capital not just to avoid penalties but to rebuild trust through transparent practices.

Age-Assurance Tech: A New Frontier

Regulatory mandates are driving investment in age-assurance technologies. Australia’s upcoming social media age ban for under-16s, set for December 2025, has spurred global demand for solutions like Yoti’s encrypted AI-based verification tools [5]. The Australian Age Assurance Technology Trial (AATT) confirmed the viability of these tools but also exposed challenges, including higher error rates for non-Caucasian users and privacy risks from excessive biometric data retention [5].

The market for age-assurance tech is projected to grow to $2.3 billion by 2027, driven by regulations in the U.S., EU, and UK [5]. However, success hinges on balancing accuracy with privacy-by-design principles. Disney’s settlement allows it to rely on YouTube’s age-assurance tools if they meet COPPA standards, signaling a regulatory endorsement of technology-driven compliance [1].

Investment Implications

For investors, the rise in compliance costs and tech investments presents both risks and opportunities. Tech-entertainment giants must allocate capital to:
1. Regulatory Compliance Teams: Legal and technical expertise to navigate evolving mandates.
2. Age-Assurance Tech: Partnerships with providers like Shufti or Yoti to ensure scalable solutions.
3. Data Security Infrastructure: Proactive measures to avoid penalties like GoDaddy’s FTC settlement [6].

Conversely, companies that innovate in compliance tech—such as those developing privacy-preserving age verification—stand to capture market share. However, investors should remain cautious about firms with opaque compliance strategies, as seen in the FTC’s warnings against weakening data security for foreign government demands [2].

Conclusion

The digital privacy compliance landscape is evolving rapidly, with regulators prioritizing accountability over innovation. Disney’s COPPA settlement is a bellwether for the sector, highlighting the need for strategic capital allocation to mitigate risks. As age-assurance technologies mature, they will become critical assets for compliance, but their success depends on addressing technical and ethical challenges. For tech-entertainment firms, the path forward lies in proactive investment, not reactive penalties.

Source:
[1] Disney to Pay $10 Million to Settle FTC Allegations, [https://www.ftc.gov/news-events/news/press-releases/2025/09/disney-pay-10-million-settle-ftc-allegations-company-enabled-unlawful-collection-childrens-personal]
[2] FTC Chairman Ferguson Warns Companies Against Censoring or Weakening Data Security for Americans, [https://www.ftc.gov/news-events/news/press-releases/2025/08/ftc-chairman-ferguson-warns-companies-against-censoring-or-weakening-data-security-americans-behest]
[3] FTC Releases 2023 Privacy and Data Security Update, [https://www.ftc.gov/news-events/news/press-releases/2024/03/ftc-releases-2023-privacy-data-security-update]
[4] Disney $43.25M Gender Pay Discrimination Settlement, [https://www.claimdepot.com/settlements/rasmussen-v-twdc-settlement]
[5] The Emerging Market for Age-Assurance Technology in, [https://www.ainvest.com/news/emerging-market-age-assurance-technology-digital-privacy-sector-2509/]
[6] Enforcement Actions, Federal Trade Commission (FTC), [https://www.jdsupra.com/topics/enforcement-actions/federal-trade-commission-ftc/data-breach/]