Roblox

I have been playing video games since I was a young child, when they were quite literally text on a screen. Much has changed since the 8-bits of my youth, and kids these days have endless options for entertainment. Minecraft, one of the most kid-friendly games now run by Microsoft, has over 150 million active users, and a robust community of enthusiasts of all ages. With this in mind, the company works to ensure a safe, fun gameplay experience for its users, even applying community safety standards to privately run servers.

What if you wanted to make a game an awful lot like Minecraft, but skip all the ‘safety’ bits? Roblox bills itself as an ‘online game platform and game creation system’ that allows its players to create games on the platform which are then playable by others. Which sounds cool! The problem is, according to a report this week from activist short seller Hindenburg Research, there are scant few guardrails on what players can do in Roblox, which has turned it into a digital cesspit:

Media and non-profit exposés from 2020 to July 2024 revealed digital strip clubs, red light districts, sex parties and child predators lurking on Roblox. The National Center on Sexual Exploitation in 2024 labeled Roblox “a tool for sexual predators, a threat for childrens’ safety”.

There are, suffice it to say, many graphic examples in the report of bad stuff happening on Roblox. This is largely because the company has not invested in proper risk and moderation tools for its community. The report speculates that one reason for this is that the company has been consistently unprofitable for years:

The company has reported net losses every quarter since becoming a public company, with last twelve months (LTM) losses totaling $1.07 billion. Its stock trades at 8.6x sales, a 57% premium to gaming peers, pricing in expectations of rapid future growth and profitability.

When given the choice between user growth and safety, the company has consistently favored the former. How is Roblox achieving that user ‘growth’? Wellll, they might be cooking the books:

Our research indicates that Roblox is lying to investors, regulators, and advertisers about the number of “people” on its platform, inflating the key metric by 25-42%+. We also show how engagement hours, another key metric, is inflated by an estimated 100%+.

For years, Wall Street has bought these claims, despite how flimsy some of them turn out to be:

In addition to inflating the reported number of “people” on its platform, we also suspect Roblox massively inflates a second key metric, “engagement hours”. The company reported an extraordinary 2.4 average hours of engagement per day per user in 2023.

This level of engagement is 58% higher than the average time spent by U.S. 8-12 year olds playing all mobile games (including tablet), according to a 2021 survey, and 26%-166% more time than leading social media platforms such as YouTube, TikTok and Instagram.

It strains belief that Roblox is half again as popular as any of the thousands of games on the market. But the company has gotten away with juicing the stats, while insiders have cashed out more than $1 billion in stock since its listing in 2021.

Most popular online games exist within larger companies - Microsoft owns Minecraft, Call of Duty, and World of Warcraft. EA owns FIFA, Madden, and Battlefield. Epic Games owns Fortnite and makes the Unreal game engine. One reason for this is that a game’s popularity will ebb and flow, often in tandem with release cycles. A new WoW expansion will generate renewed interest in the game. New versions of Madden will move millions of copies. If you only have one game in your portfolio, it can be difficult to show consistent growth to meet the demands of Wall Street.

What Roblox appears to have chosen to do to keep people playing its game is allow graphic pornography, violence, and child predators to roam unchecked, even building some of its most popular games. It allows (and perhaps encourages) bot armies from foreign countries with its Robux currency and online marketplaces. And, when that is not enough, it cooks the books to make the game seem more popular than it is.

Nor does Wall Street appear to care - the stock dropped more than ten percent the day the report came out, but quickly rebounded to prior levels. I guess the Roblox team called it correctly - child exploitation and financial fraud are less important then steady investment returns.

Child Care

One way to keep kids out of Epstein-themed Roblox game rooms is to put them in child care. If the pandemic proved anything, it was that for many working families, child care has become a necessity.

Unfortunately, private equity firms have noticed, and are on a buying spree, snapping up thousands of independent facilities around the country:

Between 2020 and 2022, while the rest of the sector was rocked by COVID-19, large for-profit chains grew by 8% —not by adding substantial new supply to the system, but mainly through acquiring smaller chains and independent programs.

The largest PE firms now own more than five thousand centers across the country serving up to half a million children. Though, despite what they tell their investors, it’s not a lucrative business:

Even though parents typically pay around a quarter of their income for such services, profits are razor thin.

It is so utterly American that our child care is expensive, care workers are underpaid and overworked, and it still isn’t profitable for anyone, somehow.

The problem with PE gobbling up child care centers is that, at some point, they will either run out of money or other firms they can sell to. Many chains are - common to the PE playbook - heavily indebted and could be tipped into insolvency by mild tremors within the market or the economy at large. Inevitable bankruptcies will harm not just investors but parents and children who will suddenly need to find new care options.

Not to mention, the quality of care at these conglomerates is often worse than nonprofit and independent centers. All of this begs the question - should child care even be a for-profit enterprise? At the very least, there is a strong argument for the government to subsidize some of the costs, so even independent child care practices can afford to operate and pay their employees a living wage. In an ideal world, families would have the funds they need to ensure someone can watch their kids while they work.

Food Lawsuits

Well well well well well:

McDonald’s has filed a lawsuit against Tyson Foods, JBS, and other major meat processing companies, accusing them of colluding for years to limit beef supplies.

[…]

McDonald’s claims the companies, including Cargill and National Beef Packing, systematically reduced production levels starting on January 1, 2015, in order to “artificially” drive up market prices. With significant control over the cattle and beef industry, the companies could manipulate prices at their will, the lawsuit says.

We have talked an awful lot around here about food prices, greedflation, and monopolistic collusion between meatpackers, and it is nice to see, uh, McDonald’s lawyers taking them to task:

“Only colluding meatpackers would expect to benefit by reducing their prices and purchases of slaughtered cattle, fully aware that their conspiracy would shield them from the pressures of a competitive market,” McDonald’s stated.

Go off, kings. It feels a bit gross to be siding with a company that has long stifled wages, abused the tax system, and pumped generations of Americans full of unhealthy processed foods but, the war against price gouging creates strange bedfellows.

Perhaps the various federal investigations and the adversarial stance taken by the FTC towards monopolistic behavior has emboldened companies like McDonald’s to join the fray, or perhaps it’s a cynical ploy to reduce their food costs, but as one of the nation’s largest purchasers of meat, a rising tide of low-cost pink slime may translate into savings for the rest of us.

Helene

Perhaps the nicest thing you could have said about old Twitter was that it was a useful place to track breaking news and alerts during major world events. Most of the major news organizations used the platform to communicate with the masses, in an increasingly fractured media landscape.

Now, however, the opposite is happening:

The U.S. government’s top disaster relief official said Sunday that false claims and conspiracy theories about the federal response to Hurricane Helene — spread most prominently by Donald Trump — are “demoralizing” aid workers and creating fear in people who need recovery assistance.

The right wing conspiratorial goons on Twitter and elsewhere are running with wild-eyed theories that FEMA is seizing land, refusing aid to Republican areas, and the government is not doing its job for disaster relief. It’s so bad the agency has set up a website specifically to debunk the claims, some of which are being spread by Trump and members of Congress.

This is what happens when a conspiracy-loving, right wing reactionary takes over a major social media site and recasts it in his image. Major natural disasters become weaponized propaganda, used to score cynical political points or by America’s enemies to further fracture an already divided country. On top of spreading disinfo, these panic merchants sow doubt in people living in disaster areas that could lead them to refuse evacuation, or worse - stay home with the belief their belongings will be looted or stolen, potentially harming anyone they encounter.

Whether it’s Twitter or Roblox, allowing social platforms to operate unchecked in the name of capitalism can lead to disastrous outcomes in real life. Every resident of North Carolina who gets fed lies by Facebook or Twitter or their right wing blog of choice could end up facing a life or death decision armed with nothing but paranoid nonsense. It is easy to sow distrust in a government during a crisis, and as our hurricane seasons get longer and more deadly, we’ll only see more of it.

Short Cons

Gizmodo - “But new documents obtained by Gizmodo reveal [Truth Social] has also been flooded with scammers who are swindling users out of enormous sums of money.”

WSJ - “For decades, the Boar’s Head heirs have fought over a company their family has owned since 1905. The court battles shed light on a secretive food empire that was generating billions of dollars in estimated annual sales before the outbreak.”

WIRED - “What was once an app full of human beings making content in conversation with each other has become a dizzying world where irony and sincerity, memes and spam, blur together into a slurry of bizarre content no one is quite sure what to do with.”

Reuters - “Dominguez is one of dozens of current and former public officials here whose finances, business relationships and political fortunes are enmeshed with the speedy growth of Starbase, as the Musk development is known. Starbase’s expansion has injected a dizzying influx of money into campaign coffers, business dealings and the personal finances of people elected to represent the public.”

WSJ - ““It’s mind-blowing to someone in the points and miles world that this is the business class you would go out of your way to fly,” said Morvitz, founder and CEO of point.me, a points and miles search aggregator and booking service. “We’re talking about a business class where if you’re in a window seat you still have to step over your neighbor to get to the bathroom.””

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