EU Considers Fines for Elon Musk's Companies Over X Violations

EU Warns Elon Musk's X of Potential Fines Linked to His Businesses

The European Union has issued a stark warning to Elon Musk’s social media platform, X, indicating that it may leverage the earnings of several companies owned by Musk to calculate fines. This action stems from X's alleged violations of EU social media regulations, particularly the Digital Services Act (DSA).

Understanding the DSA and Its Implications

The Digital Services Act, enacted in 2022, mandates major social media platforms to eliminate illegal content and maintain transparency. Non-compliance can result in significant financial penalties—up to 6% of a company’s annual revenue. As the EU investigates X for potential violations, regulators are contemplating whether Musk should face fines rather than the platform itself.

Calculating the Potential Fines

Reports from sources familiar with the legislative discussions suggest that the fines may be calculated based on the annual revenues from various Musk-owned enterprises, including:

• SpaceX
• Neuralink
• xAI
• The Boring Company

However, it's important to note that since Tesla is publicly traded, its revenue would be excluded from this calculation.

X's Financial Struggles Under Musk

These potential fines appear to be a reaction to X's dwindling financial performance since Musk took over. As of August, X's valuation stood at $9.4 billion—a staggering drop of nearly 80% since Musk's acquisition, according to Fidelity's disclosures.

Regulatory Context and Future Outlook

Thomas Regnier, a spokesperson for the European Commission, emphasized that DSA obligations apply to both natural and legal persons with decisive influence over platforms, leaving no room for ambiguity regarding responsibility.

Although the EU has not finalized its decision on whether to impose fines against X, it remains critical for the platform to address the commission's concerns competently. However, Musk’s track record suggests he may not take the necessary steps. After previously aligning with the EU on the DSA, Musk retracted from the EU’s Code of Practice against disinformation the following year, stirring controversy with EU regulators.

Conclusion: The Path Forward for X and Musk

As the debate continues within the EU, the onus now lies with Margrethe Vestager, the current head of the commission, to determine the future of X in this regulatory landscape. The public and stakeholders alike await a clear resolution to this intricate situation.