Roblox shares slide as Dutch regulator launches child safety probe
12-month EU investigation targets platform's protection of minors under Digital Services Act
Roblox shares fell 3.4% to $73.19 on Friday as Dutch regulators launched a formal investigation into whether the gaming platform adequately protects children from harmful content, predatory adults, and deceptive purchasing practices.
The Netherlands Authority for Consumers and Markets (ACM) opened the 12-month probe under the European Union's Digital Services Act, marking the latest regulatory challenge for the $52.8 billion company that has built its business around creating safe online spaces for children. The investigation will examine whether Roblox has implemented sufficient safeguards against exposure to violent and sexually explicit imagery, targeting by ill-intentioned adults, and misleading in-game purchase techniques designed to exploit minors.
Under the DSA, companies found in violation of child protection requirements can face fines of up to 6% of their global annual revenue. For Roblox, which generated $4.46 billion in revenue over the trailing twelve months, potential penalties could reach approximately $268 million. The ACM also has authority to issue binding instructions requiring operational changes if violations are confirmed.
The regulatory scrutiny follows a January 15 survey by EenVandaag indicating that one in seven Dutch parents reported their children experienced unpleasant or harmful contact on Roblox, including grooming or inappropriate behavior. The survey results helped catalyze the ACM's decision to investigate the platform's compliance with DSA requirements.
Roblox has affirmed its commitment to complying with DSA regulations and is engaging with Dutch regulators, highlighting recent measures including age verification systems via facial recognition to restrict communication between children and adults. The San Mateo-based company has built its growth strategy on attracting and retaining young users, who account for the majority of its daily active users and drive its robust engagement metrics.
The investigation adds to growing regulatory pressure on social and gaming platforms operating in Europe. The European Commission has been aggressively enforcing the DSA, including a €120 million fine against X (formerly Twitter) in December 2025 for transparency violations. The ACM previously fined Epic Games €1.1 million in 2024 for exploiting and pressuring vulnerable children into in-game purchases, suggesting Dutch regulators are willing to take substantial enforcement action against gaming companies.
Despite the regulatory headwinds, Roblox has demonstrated strong operational momentum. The company reported 48% year-over-year revenue growth in its most recent quarter, though it remains unprofitable with negative earnings per share of $1.42. Analysts maintain a generally positive outlook, with an average target price of $131.49, implying significant upside potential from current levels. Of 35 analysts covering the stock, 23 rate it a buy or strong buy, while 12 recommend hold or sell.
The investigation's timeline of approximately one year means the overhang could persist through late 2026, potentially creating volatility around quarterly earnings releases as investors assess progress on compliance measures. Roblox's high beta of 1.64 suggests the stock will continue to react sharply to regulatory news flow.
For investors, the key question is whether Roblox can demonstrate sufficient progress on child safety measures to satisfy European regulators without compromising the user engagement and monetization that underpins its growth trajectory. The outcome of the ACM probe could set an important precedent for how other large online platforms approach DSA compliance, particularly regarding protections for minor users.