This could end up prompting a significant escalation in already tense U.S. and EU relations.
As reported by The New York Times, the EU Commission is currently finalizing plans to issue Elon Musk’s X with a penalty in the range of $US1 billion for violations of the EU Digital Services Act (DSA).
As per NYT:
“European Union regulators are preparing major penalties against Elon Musk’s social media platform X for breaking a landmark law to combat illicit content and disinformation, said four people with knowledge of the plans […] The penalties are set to include a fine and demands for product changes, said the people, who declined to be identified discussing an ongoing investigation.”
The penalty relates to an investigation launched by EU officials back in 2023 around X’s revised approach to content moderation, and how that had seemingly allowed the amplification of misleading claims.
As per the EU Commission’s original announcement:
“On the basis of the preliminary investigation conducted so far, including on the basis of an analysis of the risk assessment report submitted by X in September, X’s Transparency report published on 3 November, and X’s replies to a formal request for information, which, among others, concerned the dissemination of illegal content in the context of Hamas’ terrorist attacks against Israel, the Commission has decided to open formal infringement proceedings against X under the Digital Services Act.”
EU investigators have since examined X’s compliance with its DSA obligations relating to the dissemination of illegal content, and the effectiveness of Community Notes in countering such. And the results, based on the scale of the fine being considered, were obviously not great.
So now, EU authorities are moving to penalize X under the DSA rules, which have also impacted Meta and TikTok, in different ways.
But with X, EU officials also know that they could end up crossing U.S. President Donald Trump, whose close relationship with Musk could come into play in this instance.
The Trump Administration has already made it clear that it will be looking to take a stronger stand for U.S. businesses in pushing back against “unfair” foreign deals. Last month, the newly appointed chairman of the U.S. Federal Communications Commission (FCC) publicly criticized the DSA itself, which he says is “incompatible with America’s free speech tradition.” Last month, Vice President JD Vance also criticized EU regulations relating to AI innovation, while Trump himself has also threatened European imports with increasing tariffs in retaliation for regulations that harm U.S. companies.
And with this fine aimed at Elon Musk’s platform, that could push Trump to take even harsher retaliatory action.
It seems inevitable, too, that Musk will seek Trump’s support in opposing any such fine, as X has already stated that it will challenge such in court.
And X is not exactly flooded with cash right now either.
The platform’s ad revenue remains well down on what it had been before Elon took over at the app. And while it is now sharing funding with xAI, after a recent merger between the two entities, it’s pretty clear that X is not in a position to part with a billion in penalties.
I mean, no business is, but X is in a particularly tough spot in this respect.
As such, this could be a major case to watch, and a major test of both EU laws, and Musk’s influence over President Trump.
Will Elon’s servitude to Trump pay off on the big stage, or will Trump be forced to take a more measured approach in restricting EU trade?
