Published in Svenska Dagbladet, 2024-10-20. Translated from Swedish.
The gaming platform has been described as a “nightmare landscape of paedophiles.” At the same time, two thirds of all primary school children in Sweden use it. Should parents be concerned about the accusations from Hindenburg Research?
“Escape to Epstein Island,” “Beat up the pregnant” and “Survive the killer” — these are some examples of games on the Roblox platform. In “Beat up the pregnant,” the objective is to kill pregnant women with knives and frying pans in a car park. The company itself describes its goal as to “connect a billion people with civility and optimism.” As you may notice, something does not quite add up.
Last week, short-selling firm Hindenburg Research published a report on Roblox. The platform allows users to create and publish their own games, which has led to a rather different range of content than games typically contain.
Hindenburg — named after the airship that exploded in New Jersey in 1937 — is, as the name suggests, a firm that profits when companies do badly. They short the shares and then publish reports — with obvious self-interest — that cast target companies in a poor light. When Hindenburg Research went after India’s Adani Group, the market value fell by over 120 billion kronor on the first day. Roblox’s share also took a hit after Hindenburg’s publication, though it has since recovered.
The firm’s criticism centres on two main areas. First, that Roblox is opaque about — and overstates — the number of players on its platform. Second, that it is a “nightmare landscape of paedophiles” where children and young people can encounter both inappropriate content and inappropriate people. Roblox allows children under 13 to play, but treats them differently on the platform — though in many cases children and adults play the same games simultaneously.
User numbers are an almost constant topic of debate for gaming and social media companies. What seems like a straightforward calculation rarely is. In 2016 Facebook had to apologise for having incorrectly reported how many people had watched video on its service — and overestimating video views had also distorted the associated advertising, which is Facebook’s primary revenue stream. In Roblox’s case it is a question of definition, and the company itself dismisses the criticism in a statement, saying its definitions are clear and properly disclosed. From the outside it is hard to judge — but making numbers look slightly more favourable than they are is hardly unique to Roblox on the stock market.
The second issue — around paedophiles and other inappropriate behaviour — is more serious. According to Roblox’s latest quarterly report, around 79.5 million users were active on the platform daily. Keeping track of all those users — particularly with chat functions and the ability to create custom games — is to put it mildly a challenge. Hindenburg’s report provides many examples of how obviously inappropriate content has slipped through the existing safety systems, and cites cases of multiple people arrested after attempting to arrange meetings with children on the platform. Games depicting simulated sexual assaults and similar content are numerous.
That sounds terrible — for parents especially. But provocative use of offensive names and actions is something that occurs throughout the digital world. It is not necessarily desirable, but it does not automatically mean that it is happening in reality, or that it was even intended to. Roblox maintains that it has a robust safety system that catches and blocks a great deal.
In an interview with Yahoo Finance, equity analyst Michael Pachter from Wedbush Securities commented on the report: “I don’t question that anything in the report is wrong […] but I’m not sure it’s relevant.” Pachter’s point is that the number of paedophile cases and similar incidents is very low relative to the number of users. He has a point — mathematically. But rarely has the contrast been so stark between what markets and ordinary people care about. A single paedophile is not much in statistical terms — but you don’t need more than one to cause serious harm.
Hindenburg Research are not noble knights concerned about children’s wellbeing. They are opportunists trying to make money by damaging a company that appears to have insufficient control over its operations. But what they are saying — regardless of their motives — is something that concerns every parent whose child plays Roblox. And there are many of us. Two thirds of all Swedish primary school children do.
