The European Union has imposed a $140 million fine on X, the social media platform formerly known as Twitter.
Basis for the Fine
A European Commission spokesperson stated that the fine against X's holding company results from multiple failures to comply with rules governing large digital platforms. These issues include:
- The platform's use of a blue check mark for identifying verified users, which was deemed misleading.
- A documented poorly functioning advertising repository.
- Insufficient provision of effective data access for researchers.
Official Statements and Precedents
European Commission spokesperson Thomas Regnier announced on Friday that the preference was not to fine X, contrasting this situation with the platform TikTok. Regnier noted that TikTok offered concessions to avoid such penalties. At a press conference in Brussels, Regnier indicated that constructive engagement with the Commission leads to case resolution, while a lack of engagement results in enforcement action.
Prior Investigations and Reactions
The possibility of financial penalties for X in Europe had drawn criticism from Elon Musk and some officials in Washington, D.C., since the European Commission initiated its investigation two years prior.
In July 2024, the European Commission formally accused X, which serves over 100 million users within the EU, of several violations in its preliminary findings. These allegations included failures to meet transparency mandates, obstruction of researchers' access to data, and misleading users by converting the blue verification badge into a paid subscription feature. Musk has previously stated his intention to legally challenge any EU sanctions rather than make concessions to resolve the investigation.
Under new legislation, known as the Digital Services Act (DSA), European authorities are authorized to fine offenders up to 6% of their worldwide annual revenue. This provision could have resulted in higher financial penalties for X, potentially extending to other companies owned by Musk.
Broader Implications and International Relations
This fine follows prior statements from activists and trade experts suggesting that authorities in Brussels were easing enforcement. The action against X is seen as a test of the EU's determination, especially given former U.S. President Trump's past threats of tariffs in response to EU fines against U.S. technology companies.
The situation highlights an increasing divergence regarding the concept of digital sovereignty. Europe aims to establish itself as a global authority for digital regulation, while the former U.S. administration contested perceived restrictions on U.S. companies' profits and freedom of expression.
Experts suggest that this direct punitive action against X's businesses carries the risk of U.S. retaliation, despite the EU's reliance on American technology.
The former U.S. administration consistently argued that the EU unfairly targets U.S. technology companies with financial penalties and regulations, equating these measures to tariffs that justify trade retaliation. U.S. Commerce Secretary Howard Lutnick recently stated that the EU must revise its digital regulations to secure a deal aimed at reducing steel and aluminum tariffs.
Commission's Position
The Commission denied any connection between trade negotiations with the U.S. and the implementation of its technology regulations, or any targeting of American firms or infringement on freedom of expression. Commission spokesperson Regnier stated that the digital legislation is unrelated to censorship and that final decisions are adopted without targeting specific companies, jurisdictions, or countries of origin.
Despite reported U.S. pressure, the EU has enforced its digital antitrust rules, including recent fines of $584 million on Apple Inc. and $233 million on Meta Platforms Inc. The EU has also issued substantial penalties against Alphabet Inc.'s Google over several years and directed Apple to repay €13 billion in back taxes to Ireland.