Microsoft will pay $20m (£16m) to US federal regulators after it was found to have illegally collected data on children who had started Xbox accounts.
The Federal Trade Commission (FTC) reached a settlement with the company on Monday, which also includes increased protections for child gamers.
Among other violations, the FTC found that Microsoft failed to inform parents about its data collection policies.
It follows a similar action against Amazon last week over its Echo devices.
The FTC said Microsoft violated the Children’s Online Privacy Protection Act by not properly getting parental consent and by retaining personal data on children under 13 for longer than necessary for accounts created before 2021.
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