Main investor pulls out of Habbo parent company

A Channel 4 News exclusive investigation discovered that Habbo, which attracts more than 10 million users a month, was allowing users to post pornographic and violent messages – despite the fact that Habbo is targeted at young teenagers.

Late on Wednesday the company’s main investor, the private equity group 3i, which held a multi-million pound 16 per cent shareholding, said it was pulling out of Habbo’s Finnish parent company, Sulake. In a statement, 3i said:

“3i has actively supported the Sulake board in determining the right course of action in these very challenging circumstances. Following a board meeting today, we have resigned our board position and will cease to be a shareholder in the company.”

Read more: EU: Improve moderation or we could shut you down

Within hours of the exclusive report by Channel 4 News on Tuesday, Sulake had suspended all conversations on the site – provoking an irate reaction from many users.

CEO Paul LaFontaine explained on Twitter and the company’s Facebook site that: “Due to the challenging behaviour of a few users we have decided to mute the site and will update you when we have more information.”

Habbos, due to the challenging behavior of a few users we have decided to mute the site and will update you when we have more information.

— Paul LaFontaine (@PaulLaFo) June 12, 2012

He later tweeted: “Habbos I am saddened but believe it is right to mute all while we continue to investigate. I’ll be sure to update you when I can.”

He claimed Habbo employs more than 225 moderators tracking some 70m lines of conversation and its moderation and safety system was recognised as one of the safest social networks in a 2011 European Commission report.

Having seen our report, European Commission Vice President Neelie Kroes told Channel 4 News that if Habbo Hotel did not address the flaws in its moderation which has been exposing children to sexual content, she would be “forced” to regulate. Asked if she would consider closing it down, she said: “at the end of the day, that should be a remedy that is stake.”

And in the House of Commons on Wednesday, Labour’s Shadow Education Secretary Stephen Twigg described as “extremely disturbing” the evidence in the Channel 4 News report that “children are being sexually propositioned on the website” and called on the minister to update parliament on what action it would be taking.

Silent protest

Following the “muting” of the site, silent protests were staged on-screen by angry users (pictured).

Habbo’s Facebook page, which has 1.1m followers, has had more than 600 comments posted following the decision to “mute” its players.

All of the high street retailers in the UK which stock Habbo gift cards for the site have now withdrawn them from sale following the investigation.

A spokeswoman for WH Smith says: “We were concerned to learn of the allegations about Habbo Hotel made in the Channel 4 News report. In response, we have currently taken this product off sale, pending further investigation.”

Tesco had been selling a £10 gift card which gave users 80 credits to use on the website. It said: “Following this investigation, we have taken the decision to remove the Habbo Gift Card from sale.”

Computer games chain GAME has also withdrawn the cards. In a statement, it said: “After careful consideration we have withdrawn this product from sale pending further investigation.”

“The cards have been withdrawn with immediate effect from all 339 of our stores.”

Social media backlash

Following the report, Channel 4 News was bombarded with angry messages on Twitter and Facebook after the site was silenced.

Programme Editor Oliver King – whose Twitter name was retweeted by Sulake CEO Paul LaFontaine – was deluged with tweets; among them messages accusing him of having “ruined a day for more than two million people”.

He wrote on Twitter: “Being trolled by idiots for retweeting about a brilliant C4 News investigation I didn’t write/report about how Habbo site is unsafe for kids.”

If anything the reaction demonstrated the huge popularity of the site amongst young users – all the more reason why it is a valid subject for investigation. Oliver King

He explained later: “I tweeted a link to our Channel 4 News report on Habbo Hotel last night, and was shocked at the response. Shortly after our report was broadcast, Habbo Hotel “muted” the site, shutting down the chat function – and some of their 251m users directed their anger about this to my Twitter timeline.

“This ranged from Habbos questioning our journalistic motives to those calling me a paedophile. If anything the reaction demonstrated the huge popularity of the site amongst young users – all the more reason why it is a valid subject for investigation. The purpose of our report was to bring this issue of moderation to light and highlight the potential dangers to young children.”

On YouTube, one Habbo fan was moved to make this video showing the “protests” taking place inside the game.

Channel 4 News hosted a Facebook debate which fielded questions posed to internet safety expert John Carr, who featured in our report and is taking his concerns to the government.

Lucy Hill asked: “How high does this website rank among online child safety threats? If it ranks as one of the highest, as one would presume it does with 300,000 underage UK users, why was a government adviser on internet child safety previously unaware of the threat it posed? Does this call into question the government’s and your own monitoring methods?”

Mr Carr replied: “In the UK we run a system of self-regulation. It means companies are trusted to abide by agreed standards. The children’s organisations simply do not have the resources to monitor sites in a systematic way.

“Maybe that needs to change.”

Read more - Striptease and cyber sex: my stay at Habbo Hotel

European Commission Vice President Neelie Kroes told Channel 4 News that the wider problem had to be addressed: “All of the technology companies should feel the heat. But that is only part of the story. It is the technology companies, the parents, the teachers, it is also the government. It is up to all of us to address the issues.

“I can’t image one person on earth who would say ‘it doesn’t matter’. These are actions that we should never ever tolerate.”

A software firm which specialises in providing moderation software for online games firms claims human moderators will never stop online sex predators.

Crisp claims only sophisticated software can monitor large volumes of chat messages sent every day, and has worked with the police to combat web chats by paedophiles.