The European Commission (EC) announced on July 12 that Elon Musk’s X might have violated the Digital Services Act (DSA).
These preliminary findings follow an investigation initiated in December 2023, which raised concerns about X’s content moderation, use of generative artificial intelligence (AI), data provision to researchers, and transparency in advertising practices.
If the violations are confirmed, the company could face fines of up to 6% of its global annual revenue. Given X’s 2023 revenue of about $3.4 billion, these fines could exceed $200 million.
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One of the main complaints is directed at X’s verification system. The Commission criticized X’s “blue check” system for failing to meet industry standards, noting that evidence shows malicious actors have exploited this system to mislead users. The EC explained:
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.
Other concerns involve X’s advertising practices. The EU mandates that large online platforms maintain transparency about their advertising methods, which X allegedly failed to follow.
Additionally, X reportedly did not provide researchers with necessary access to public data via the X API, further breaching the DSA.
Thierry Breton, Commissioner for Internal Market, highlighted that the findings are not final and that X has the opportunity to defend itself. Elon Musk responded to his statement by making a sarcastic remark.
Should the preliminary findings ultimately be found violating the DSA, X could face substantial financial penalties and a period of enhanced oversight to ensure compliance with the law.
In other news, Musk has recently been sued by Tesla shareholders, accusing him of diverting AI talent and resources from Tesla to xAI.
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