Potential Multimillion-Euro Penalties Loom for Musk: EU's Strategic Response

Elon Musk may soon face significant financial repercussions as the European Union considers imposing hefty fines on his social media platform, X, previously known as Twitter. The platform, acquired by Musk in 2022 for EUR44 billion, has reportedly breached regulations outlined in the Digital Services Act (DSA), which aims to combat illegal content and misinformation online.

Under the DSA, companies found in violation of the rules can incur fines amounting to six percent of their global annual revenue. For X, which reported a revenue of EUR2.5 billion in 2024, this could translate to fines of approximately EUR150 million. Recent reports indicate that the European Commission is contemplating incorporating Musk's artificial intelligence firm, xAI, into the revenue calculations, which could elevate potential penalties significantly.

According to a report from a prominent news outlet, the fines could potentially exceed $1 billion as the EU intends to make an example of X to deter other companies from violating the DSA. A spokesperson from the EU Commission, responding to inquiries, described the reports as speculative.

Andreas Schwab, a member of the European Parliament and an expert on the DSA, has defended the EU's approach, asserting that X has been made aware of the violations for several months. He criticized the company for prioritizing profit over fostering a healthy public discourse.

Last year, European regulators concluded that X was in breach of the DSA due to its refusal to disclose essential data, which hampers efforts to measure the spread of misinformation and other harmful content. Furthermore, the EU has raised concerns regarding X's lack of transparency regarding advertisers and its failure to verify the identities of users who pay for verified accounts, thereby increasing the platform's vulnerability to misuse and foreign interference.

Negotiations between the EU and X regarding the ongoing investigation have been ongoing for several months. Following a preliminary ruling against X last year, the company submitted numerous counterarguments that regulators are currently addressing.

This development is likely to escalate tensions between the EU and the United States, as it directly targets one of the closest advisors to the U.S. President. Recently, President Trump announced significant tariffs against the EU, which may further complicate the situation.