When YouTube was fined US$170 million by the FTC for reportedly violating COPPA (by allowing kids personal data to be captured), it announced major changes were coming for kids and family content creators.

Last week, the AVOD platform started to roll out those changes, including requiring creators to flag videos that may appeal to children. The definition of what actually is considered a video for kids though, is quite broad, including videos obviously directed at children, but also content which could appeal to kids (cartoons, toys and educational material). The breadth in this category underlines how comprehensively YouTube appears to be treating the FTC settlement.

If a video is child-directed, data collection will be blocked, resulting in lower ad revenue and reducing engagement features (such as through comments). According to Tubefilter, this will lead to 50% to 90% reduction in revenues for these content creators.

Understandably content creators are upset. They’re blaming COPPA and the FTC. And they’re blaming YouTube.

Unfortunately the stricter content policies are unlikely to stop there, and next time enforcement will likely be led by individual US states and private class action lawsuits. Then, of course, the same thing will happen in Europe under GDPR-K, which is the EU’s new privacy regulations for children put in place last year.

On the surface the situation seems to be unfairly placing the burden on kids content creators. But the reality is that was inevitable.

YouTube was only ever designed for adults, but was being used to reach kids. At some point the legal math was going to catch up to everybody.

However the deeper issue here is not YouTube. It’s the historic (and ongoing) lack of investment into kidtech by the major technology companies. Adult platforms (such YouTube) have been used by content creators because the infrastructure to support kids content and developers simply hasn’t been built.

In 2018 total R&D investment by major technology companies was US$98 billion, according to data gathered by PwC. In contrast, investment into kids companies was, at most, US$500 million, according to Crunchbase. Kids were 40% of all new internet users in 2018, but represented less than 1% of all technology investments. Disregard the moral point for a second—the internet will soon be more kids than adults. The way we’re investing today, means we’re fundamentally investing in the past.

Excluding Roblox (the major consumer outlier), virtually all investment in kidtech platforms and tools is happening outside of Silicon Valley. Some examples include:

• Kidoodle (preschool kids AVOD platform): Calgary, Canada
• Soapbox Labs (kids voicetech): Dublin, Ireland
• TwoHat (content moderation): Kelowna, Canada
• Crisp (content moderation): Leeds, England
• SuperAwesome (kidtech developer tools): London and NYC
• Rukkaz: (kids AVOD platform): London

Silicon Valley is very good at producing products for adults, but there are several historic factors which contributed to that same ecosystem missing kids. Many founding teams had no parenting experience. Expertise in digital privacy economic models was (and still is) limited. The lack of kids strategy in big technology companies limited any spin-outs, which in turn minimized investor education. This creates a chicken-egg problem for kidtech startups trying to raise capital.

Looking to the future though, two dynamics are changing the status quo and improving the situation for kids/family content creators: legislation and market forces. We’re already seeing kids digital laws expanding from just focusing on data privacy towards including issues such as user interfaces. Moving forward, we’re more likely now to see legislation which forces tech platforms to have a mandated chief children’s officer, required R&D levels for kidtech, and a minimum parental quota for product development teams for consumer platforms.

Market forces are already evident. There is a reason that Apple, Disney, Netflix and Amazon are spending heavily on children’s content. Desktop browsers and mobile were the first two structural internet disruptions. The third is clearly kids. Each revolution saw the emergence of new players, the only difference this time is that the kidtech platforms of the future are unlikely to come from Silicon Valley.

Dylan Collins (@MrDylanCollins) is CEO of SuperAwesome, a kidtech platform. He is also a venture partner in Hoxton Ventures. SuperAwesome has invested in a range of companies across the digital kids space, including TotallyAwesome, Kids Corp, Kids Insights and Tankee.