EU Considers Expanding Potential Fines for X, Targeting Musk’s Broader Business Empire

The DSA, which became enforceable in August, allows the EU to fine companies up to 6% of their annual global revenue if they fail to adequately tackle illegal content or disinformation. While penalties are typically calculated based on a platform’s revenue, regulators are considering whether revenue from other Musk-owned companies—including xAI and The Boring Company—should also be factored into any potential fines. This approach would effectively treat Musk himself, rather than just X, as the entity responsible for violations.

According to Bloomberg, Tesla’s revenue is not expected to be included in this calculation, as it is a publicly traded company and not under Musk’s complete control. However, the inclusion of revenue from Musk’s other privately held ventures could represent a significant financial risk for X.

The European Commission’s investigation into X focuses on multiple potential violations of the DSA. The social media platform has faced scrutiny for its handling of disinformation and illegal content, especially following changes made by Musk after his acquisition of the company. The EU is leading a broader global effort to crack down on harmful online content, and Musk has previously expressed frustration, arguing that such regulations threaten free speech.

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Despite the ongoing investigation, the commission has not yet decided whether X will face any penalties. According to Bloomberg, regulators have not determined the final amount of a potential fine, and X may be able to avoid significant penalties if it addresses the commission’s concerns. However, if the fines are levied, they could be much larger than initially expected, given the potential inclusion of revenue from Musk’s other companies.

Related: European Commission Excludes X from Gatekeeper Status under EU’s Digital Markets Act

X is also likely to challenge any EU decision in court. Musk has previously stated his intention to fight potential DSA fines, calling it a “very public battle” that he is prepared to wage in the courts. Although X has not responded to recent requests for comment, Musk has made his stance clear in past public statements.

The investigation into X was initially spearheaded by Thierry Breton, the former EU tech chief known for his frequent clashes with Musk. After Breton’s resignation in September, enforcement of the DSA fell under the purview of Margrethe Vestager, the EU’s competition and digital affairs commissioner. Vestager will have the final say on any penalties imposed on X, as well as how fines are calculated.

A spokesperson for the European Commission, Thomas Regnier, emphasized that the DSA’s requirements apply regardless of whether a platform is controlled by an individual or a corporate entity. “The obligations under the DSA are addressed to the provider of the very large online platform or search engine,” Regnier said. However, he did not elaborate on whether this specific case would lead to fines encompassing revenue from Musk’s other companies.

Earlier this year, the EU raised concerns about X’s verification system, noting that the platform’s blue check marks, which signal “verified” accounts, could mislead users into trusting accounts that may be operated by malicious actors. Additionally, the platform’s lack of transparency in advertising and its failure to share data with researchers have raised red flags for EU regulators.

Source: Bloomberg