Does Roblox Exploit Child Labor in the Metaverse?

British YouTuber Quintin Smith blew the lid off of a long-simmering controversy surrounding Roblox, creator of one of the world’s most popular video games — or “platforms,” or “universes,” or whatever else it may be dubbed for the sake of legal expediencies. In 2021, Smith posted an investigation on his channel People Make Games that attracted nearly two million views. This was followed by an attempt by Roblox at the beginning of this year to silence him. Rather than remove the first video, Smith and his team continued their investigation, uncovering even more lurid details about Roblox’s operations. The follow-up effort has since been viewed 7 million times.

So, why all the fuss?

According to Smith, Roblox is working to turn back the clock on child and labor protections as well as to undercut antitrust laws. Worse, this strategy is symptomatic of the behavior of the tech sector as a whole. If he’s right, then Roblox may well be the harbinger of the kind of venal exploitation that will fester on the newly heralded “metaverse.”

The two videos, which each deserve to be viewed themselves, paint a rapacious vision of Roblox. To begin with, the multiplayer platform draws on a core base of players aged 9 to 15: the premise is that children are coming together to make games for other children to play. To this end, Roblox offers free development tools and hosting. But Roblox’s games are not called “games” — they are “experiences.” This word game is used in order to avoid legal problems that would arise by placing Roblox (itself nominally a game) in other game stores. The reclassification maneuver has proven to be so successful that Roblox has grown into the most popular game in the US and Europe: there are 200 million monthly players and over 20 million hosted “experiences.” Compare these numbers to those of the video game distribution service Steam, which had 134 million monthly active users in 2021 and only 55,000 hosted games.

However, while Steam takes a 30 percent commission from developers’ earnings, Roblox takes a staggering 75.5 percent, although that number is only the tip of the moneymaking juggernaut.

In reality, Roblox is profiting at every turn. Their intuitive development tools do not require advanced development skills, but they don’t foster the development of any transferable skills either. Through a combination of marketing, summer camps, internships, and the ambiance of the game itself, players are immersed immediately in the virtual capitalism of the platform. The in-game currency is called Robux, and it is traded between players for in-game assets. For each transaction on the platform, Roblox takes an additional 30 percent commission. This is a closed economic system. It is impossible to promote your own product because Robox doesn’t allow for browsing games outside of a list of the most popular.

Developers are left to either seek outside promotion or pay the platform itself for advertising by bidding in an auction (with Robux, no less). Aspiring developers are given an opportunity to form a development team with other players, paying them in Robux for their labor. Keep in mind, all of this has been set up for minors.

When it comes to sucking up real bucks, Roblox is remarkably efficient: it reports that only 17 cents out of the dollar escapes its clutches. Aside from the strong incentive to reinvest in in-platform marketing, Roblox also disincentivizes withdrawals in other ways. To begin with, one needs a $5 monthly “premium” subscription to be able to withdraw funds, and then to do that you need to have a minimum balance of 100,000 Robux. And get this: Roblox sells 100,000 Robux for US $1,000, but buys them for only $350. When Roblox is challenged about these practices, its defense is that the company is not profitable. But, when Roblox went public on the stock market in 2021, it was valued at $41 billion, putting it just below Nintendo and ahead of Electronic Arts, which means the company is worth seven times more than the game-developing giant Ubisoft.

Meanwhile, Roblox CEO Dave Baszucki’s net worth has been estimated at around $8.3 billion. As Smith points out, looking like it is losing money is the way that Roblox has rocketed to its current niche. A form of platform capitalism, Roblox fulfills its legal obligation to its investors by maintaining a monopoly; the payout comes with the amount of the market that Roblox exclusively controls.

So Roblox’s business model is a throwback to the days of monopoly capitalism, child labor, and company scrip. Smith also points out that Roblox’s brand of platform capitalism trades on encouraging lucrative predatory behaviors. For example, the company has created black markets for players seeking to bypass its high commissions and unfavorable exchange rates.

The irony is that these back alleys pale alongside Roblox’s crowning achievement: the creation of an in-game virtual stock market of NFT-like “collectibles,” complete with charts and graphs that encourage speculative trading via price fluctuations. Being listed on the New York Stock Exchange in 2021 may have marked the company’s arrival in the gaming market, but Roblox had already set up shop in the “metaverse” via its very own stock exchange of in-game assets bought and sold for in-game currency. This has led to some speculation that Robux may eventually make the leap to cryptocurrency.

Last February (2022), the Motley Fool reported in Does Roblox Have a Plan to Win the Metaverse? that Roblox has a leg up on competitors in the race to monetize the metaverse. Citing a successful partnership with skateboarding lifestyle brand Vans, the article observes that “it’s easy to see how other brands will recognize the value in having a presence in the metaverse, and Roblox should be able to show it has the experience and success in hosting those brands.”

Meanwhile, our understanding of this so-called “metaverse” is evolving rapidly. In a recent Wired article, Eric Ravenscraft noted that “the term doesn’t really refer to any one specific type of technology, but rather a broad (and often speculative) shift in how we interact with technology.” Maybe it isn’t a matter of Roblox “winning” the metaverse, then, but of helping to define it.

When Facebook, Inc., changed its name last year to Meta Platforms, Inc., it was with the stated  goal to bring “the metaverse to life and help people connect.” The emerging metaverse, the company explained, “will feel like a hybrid of today’s online social experiences, sometimes expanded into three dimensions or projected into the physical world.” Last week, Meta’s president of Global Affairs, realizing that this didn’t sound reassuring, clarified: “There won’t be a Meta-run metaverse, just as there isn’t a ‘Microsoft internet’ or ‘Google internet’ today…. It isn’t a single piece of cloth, but a patchwork quilt.” Just what the metaverse will be in terms of aesthetics and technology is still unknown. But what is certain is that it will place an immense concentration of power into a few hands. And that suggests that some of the darkest chapters in labor history may be making a comeback.

As posited by the 2021 Netflix documentary The Social Dilemma, Facebook has shown us the way that platform capitalism can turn users into the producers and products the company sells to advertisers. Of course, along the way, this arrangement assists powerful forces that want to manipulate democracy for their own ends. If platform capitalism is the economic term for these practices, then we can logically assume that the “metaverse” is going to serve as the candy-coating that will make such blatant inequity culturally and ethically palatable.

Meanwhile, in April 2022, IT services consultant Accenture held its first all-metaverse workday with 150,000 new employees donning VR headsets. This is only the beginning. Perhaps, like Roblox, future corporations will pay their employees in company scrip worth 17 cents to the dollar. Or else children and other vulnerable populations, strapped into VR headsets, will be exploited for their cheap labor. Or, perhaps, like Facebook, our “metaverse” overlords will find a way to never pay them at all.

Also published here.