Offices of YouTube and Google. Photos: Jason Doiy/ALM/Shutterstock.com

Google LLC Wednesday agreed to pay a record $170 million penalty and make compliance changes after violating children's privacy rights. But one regulator said the settlement didn't go far enough and urged attorneys general nationwide to sue the company.

"More action is needed, and I hope that our partners in state attorneys' general offices can finish the job," said a statement from Federal Trade Commission Commissioner Rebecca Kelly Slaughter, who dissented.

The Google penalty was part of a settlement with FTC general counsel Alden Abbott and New York Attorney General Letitia James. Under the deal, New York receives $34 million of the penalty.

A Google representative didn't respond to questions but referred Corporate Counsel to its statement, a lengthy blog post by YouTube CEO Susan Wojcicki detailing its policies, products and practices. Wojcicki wrote, "Responsibility is our number one priority at YouTube, and nothing is more important than protecting kids and their privacy."

The joint complaint filed against Google and its online video platform, YouTube, accused the companies of displaying content for children, gathering and tracking the viewer data, and then targeting ads at those children. The complaint said their conduct violated the Children's Online Privacy Protection Act, or COPPA.

"Just as the attorney general of New York contributed to bringing this action," Slaughter said, "the other 49 states' attorneys general remain empowered by COPPA to take action against the violations that we detail in the complaint."

Specifically, Slaughter wants the states to seek an injunction demanding that Google create a technological backstop to evaluate content and keep creators and YouTube honest about whether content is child-directed.

The complaint identified several content creators, including toy brands Mattel Inc. and Hasbro Inc., as well as the Cartoon Network.

Under COPPA, if content is directed to children, then it is illegal to collect personal information from those viewers without getting parental consent. Under Wednesday's settlement, YouTube must ask a content's creator to designate the content as child-directed or not.

If the creator designates it is for general audiences, then Google can collect viewer data and target ads, sharing the revenue with the creator. If the creator says it is child-directed content, then parental consent must be obtained first to gather viewer data and target ads.

Slaughter wants Google to be more responsible for identifying child-directed content, and not depend on the creators' honesty.

"My concern is with the vast universe of content creators who will conduct a different cost-benefit analysis in which the perceived payoff of monetizing child-directed content through [targeted] advertising outweighs the perceived risk of being caught violating COPPA," she said.

Slaughter, a Democrat appointee, was joined by fellow Democrat Commissioner Rohit Chopra in filing dissenting statements. Chopra noted it was the third time since 2011 that the commission has sanctioned Google for privacy violations.

Chopra went on to analyze Google's profits and, while the numbers are redacted in his statement, he suggests the company profited considerably more from its illegal behavior than it paid in the penalty.

"When Google pays a fine and still profits from misconduct, this is not a penalty," his statement said.

The three-person Republican majority on the commission found that the fine was substantial and adequate. Chairman Joseph Simons and Commissioner Christine Wilson issued a joint statement calling the settlement "groundbreaking" and a "significant victory" that sends a strong message to platforms.

Besides the penalty, the settlement requires Google and YouTube to maintain a system that permits creators to identify their child-directed content. The companies must notify creators that their content may be subject to the COPPA rule's obligations and provide annual compliance training for employees who deal with YouTube content creators.