EU Imposes €120M Fine on Elon Musk’s X, Straining US Relations

The European Union has imposed a significant fine of €120 million on Elon Musk’s platform, X, due to violations of transparency obligations mandated by the Digital Services Act (DSA). This ruling highlights increasing tensions between the EU and the United States over digital regulatory practices.

Understanding the Violations

X was found to be in breach of the DSA’s requirements, which are crucial for very large online platforms. Key issues identified include:

• The design of X’s blue checkmark was deemed “deceptive” as it transitioned from a verification tool to a paid feature.
• The platform’s advertising library was criticized for its lack of transparency.
• Failure to provide the necessary public data access for researchers, as outlined by the law.

Background of the Investigation

This fine is part of an ongoing investigation that commenced nearly two years ago. It is significant as it represents one of the earliest enforcement actions under the DSA. Notably, other aspects of the investigation related to X’s measures against illegal content and misinformation remain unresolved.

Comparison with TikTok’s Case

Henna Virkkunen, the European Commission’s Executive Vice President for Tech Sovereignty, drew comparisons between the outcomes for X and TikTok. On the same day, TikTok’s investigation concluded without a fine, as the company agreed to modify its service design.

Future Implications and Regulatory Landscape

Virkkunen emphasized that the EU’s approach is not focused solely on imposing fines but ensuring compliance with digital legislation. Companies that adhere to these rules will avoid penalties.

The DSA allows for fines of up to 6% of a company’s global annual turnover. While specific revenue figures for X are not public, estimates suggest they are in the low single-digit billions. In contrast, Musk’s broader business ventures generate significantly higher revenues.

The enforcement of the DSA signals a tightening of digital regulations in Europe, potentially affecting numerous tech companies as the EU seeks to enhance accountability and transparency in online platforms.