EU may “make an example of X” by issuing $1 billion fine to Musk’s social network

Regulators discuss size of penalty as X calls punishment "political censorship."

European Union regulators are preparing major penalties against X, including a fine that could exceed $1 billion, according to a New York Times report yesterday.

The European Commission determined last year that Elon Musk's social network violated the Digital Services Act. Regulators are now in the process of determining what punishment to impose.

"The penalties are set to include a fine and demands for product changes," the NYT report said, attributing the information to "four people with knowledge of the plans." The penalty is expected to be issued this summer and would be the first one under the new EU law.

"European authorities have been weighing how large a fine to issue X as they consider the risks of further antagonizing [President] Trump amid wider trans-Atlantic disputes over trade, tariffs and the war in Ukraine," the NYT report said. "The fine could surpass $1 billion, one person said, as regulators seek to make an example of X to deter other companies from violating the law, the Digital Services Act."

X's global government affairs account criticized European regulators in a post last night. "If the reports that the European Commission is considering enforcement actions against X are accurate, it represents an unprecedented act of political censorship and an attack on free speech," X said. "X has gone above and beyond to comply with the EU's Digital Services Act, and we will use every option at our disposal to defend our business, keep our users safe, and protect freedom of speech in Europe."

Penalty math could include Musk’s other firms

The Digital Services Act allows fines of up to 6 percent of a company's total worldwide annual turnover. EU regulators suggested last year that they could calculate fines by including revenue from Musk's other companies, including SpaceX. Yesterday's NYT report says this method is still under consideration:

Unlike Google, Meta, Apple and Amazon, which are publicly traded, X is owned solely by Mr. Musk. EU regulators are considering using a piece of the law that lets them calculate a fine based on revenue that also includes other companies Mr. Musk privately controls, like his rocket maker, SpaceX. That increases the potential penalty to well over $1 billion, one person said.

The NYT report said it's possible the EU and X could reach "a settlement if the company agrees to changes that satisfy regulators' concerns." But there is also a separate EU investigation in which regulators "are building a case that X's hands-off approach to policing user-generated content has made it a hub of illegal hate speech, disinformation and other material that is viewed as undercutting democracy across the 27-nation bloc," the report said. This second investigation reportedly could lead to additional penalties.

The EU announced a formal investigation into X in December 2023, saying it would "assess whether X may have breached the Digital Services Act (DSA) in areas linked to risk management, content moderation, dark patterns, advertising transparency and data access for researchers." A July 2024 ruling that X violated the law cited Musk's overhaul of the verification system created when the company was called Twitter, and other changes.

X "designs and operates its interface for the 'verified accounts' with the 'Blue checkmark' in a way that does not correspond to industry practice and deceives users," the EU regulator said at the time. "Since anyone can subscribe to obtain such a 'verified' status, it negatively affects users' ability to make free and informed decisions about the authenticity of the accounts and the content they interact with. There is evidence of motivated malicious actors abusing the 'verified account' to deceive users."

The EU further said that "X does not comply with the required transparency on advertising," and "fails to provide access to its public data to researchers in line with the conditions set out in the DSA."

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