European Commission Imposes EUR120 Million Fine on Elon Musk's X Platform for Digital Services Act Violations

The European Commission has levied a fine of EUR120 million against the social media platform X, owned by Elon Musk, due to multiple breaches of the European Union's Digital Services Act (DSA). This enforcement action marks the first significant penalty under the DSA for non-compliance with digital regulations in the region.

The Commission identified three primary violations committed by X. The first infraction concerns the platform's verification system, particularly the blue check marks. Originally designed to indicate verified and credible users, the blue check mark has since become available for purchase by any user following Musk's acquisition of the company, formerly known as Twitter. This change, according to the Commission, has resulted in the verification system being misleading and susceptible to abuse by fraudulent accounts and automated bots, contravening Article 25 of the DSA. The penalty for this violation amounts to EUR45 million.

The second violation involves the platform's failure to maintain a comprehensive and publicly accessible archive of online advertisements shown to users. The DSA requires digital platforms to provide transparency in advertising, ensuring that users and regulators can effectively monitor the spread of fraudulent schemes or manipulated political content. X's lack of an adequate advertising archive breaches Article 39 of the DSA, resulting in an additional EUR35 million fine.

The third breach pertains to the platform's obligation to provide researchers, including those from non-profit organizations and academic institutions, with access to data essential for identifying and understanding systemic risks such as disinformation and hate speech. Article 40(12) of the DSA mandates this level of data access to support research into harmful online content and its dissemination. X's non-compliance with this requirement has led to a further EUR40 million penalty.

The investigation into X's practices extended over two years, with the Commission facing external criticism regarding the perceived pace of the proceedings. Some observers speculated about political motivations, given Elon Musk's connections and the broader context of transatlantic relations. Despite such commentary, the European Commission has emphasized that the fines are based on the severity of the violations rather than the company's overall size or financial standing. The calculation for the penalties, such as those related to the blue check mark, was informed by the estimated revenue generated from relevant activities within the EU, though precise figures remain confidential.

Critics have noted that the EUR120 million total fine represents a small fraction of the potential maximum penalty under the DSA, which permits fines of up to six percent of a company's global turnover. Since X is now privately held and no longer publishes financial reports, the exact turnover figures are not publicly available. Nevertheless, the Commission maintains that the imposed fines are proportionate and appropriate given the nature and impact of the infractions.

Reactions from the United States government have included statements characterizing the penalties as excessive, with some officials suggesting that the EU's actions may be an attempt to curtail free speech or target American companies. The Commission, however, reiterates that the enforcement of digital regulations aims to protect users from misinformation, fraud, and systemic risks, and that all digital service providers operating within the EU are subject to the same legal requirements.

This case underscores the European Union's commitment to upholding its digital laws and signals to other global technology firms the importance of compliance with the DSA. The outcome sets a precedent for future regulatory enforcement and highlights the growing scrutiny faced by major online platforms in the European market.