The EU vs X: How big could the fines be for Musk?


By AFP
September 25, 2024


The EU is weighing action against X as part of a probe into whether the platform is breaching its content moderation rules - Copyright AFP/File Kirill KUDRYAVTSEV
Daniel ARONSSOHN

Elon Musk’s X is in hot water with the EU for allegedly breaking new content rules — and the world’s richest man risks multibillion-dollar fines even he might find prohibitive.

The European Union could decide within months to take action against X, including possible fines, as part of a probe into whether the social platform is breaching a landmark content moderation law, the Digital Services Act (DSA).

Nothing has yet been decided, but if the EU’s executive does decide to strike then the amount Musk could be liable for might be considerably higher than expected.

That’s because the EU could calculate fines not just on the basis of X’s turnover — but on the revenues of Musk’s entire business empire, including Tesla and SpaceX.

Already embroiled in legal woes in Brazil, the social network formerly known as Twitter was accused by the European Commission in July of misleading users with its blue checkmarks for certified accounts, insufficient advertising transparency and failing to give researchers access to the platform’s data.

The allegations are part of a wider inquiry into X, opened in December, and regulators are still probing how it tackles the spread of illegal content and information manipulation.

Under EU legislation, for each of the offences Brussels could impose a fine of up to six percent of the annual worldwide turnover of the service “provider”.

“This applies irrespective of whether the entity exercising decisive influence over the platform or search engine is a natural or legal person,” European Commission spokesman Thomas Regnier told AFP.

In other words, the EU could hold Musk himself liable and the six percent could be levied against all the companies he controls — not just X.

That would potentially increase the penalty around thirty-fold, up from $200 million if only X’s revenues are targeted to over $6 billion for each of the separate charges.

AFP based the calculation on Tesla’s sales of $97 billion last year and estimates published in the media for X and SpaceX, neither of which release their figures publicly, totalling some $12 billion.



– ‘Very public battle’ –



Whether the EU will ever go that far is a major question.

Even if it does eventually decide to hit Musk with fines, experts say it is unlikely that Brussels would seek the maximum possible from the mega-rich magnate.

But just having the threat of such eye-watering penalties hanging over him could be enough to bring the “free speech absolutist” to heel — even if his net worth is currently estimated at $210 billion.

X can still avoid being told to cough up if it agrees to make changes in line with the EU’s demands.

The company now has access to the EU’s file and can defend itself including by replying to the commission’s findings.

In a move that might soften the tough stance from Brussels, the EU’s tech enforcer Thierry Breton quit suddenly this month after failing to get reappointed for a new term.

The combative Frenchman had taken a hard line against online giants and clashed with Musk in a series of high-profile spats.

For now, EU competition chief Margrethe Vestager is in charge, before Finland’s Henna Virkkunen is expected to take over as the bloc’s new tech chief.

But despite the change in personnel the EU insists its position remains firm.

The implementation of the regulations will now be “less political and flamboyant, but probably just as tough”, said Alexandre de Streel of the Centre on Regulation in Europe.

Romain Rard, from the law firm Gide in Brussels, said that extending the scope of the fine to cover Musk’s other companies would be a “conceivable” option for the commission to take, depending on how his empire is structured legally.

But, Rard cautioned, it would be a “much riskier” strategy for the EU.

Either way, any penalty that might be levied would almost inevitably end up being caught up in complex legal wranglings before the EU’s top court in Luxembourg — especially as Musk has already warned of a “very public battle”.

That could be a high-stakes first test case for the EU’s new content law, which has not yet been tested in court.

“It’s the courts that will end up deciding,” Rard said.