In a landmark move, the European Union has levied its first-ever financial penalty under the new Digital Services Act, imposing a hefty fine of €120 million (approximately $140 million) on Elon Musk's social media platform, X. The penalty was announced by the European Commission, which cited violations related to deceptive design practices, a lack of advertising transparency, and blocking researcher access to public data.
Why X Faced the EU's Wrath
The core of the EU's case revolves around X's controversial blue verification checkmark system. Under Musk's ownership, the platform transformed the once-prestigious symbol into a feature available to anyone willing to pay for a subscription, with minimal identity verification. The Commission stated this makes it "difficult for users to judge the authenticity of accounts," potentially exposing them to scams, impersonation, and manipulation by bad actors.
Executive Vice-President Henna Virkkunen was unequivocal, stating that "deceiving users with blue checkmarks, obscuring information on ads and shutting out researchers have no place online in the EU." The investigation, which began two years ago, also found X's ad repository lacked crucial details like payment sources and that the platform erected barriers for independent researchers studying systemic risks.
Musk's Defiant Response and US Backlash
Elon Musk responded with characteristic defiance on his platform. He claimed European regulators had proposed an "illegal secret deal" where platforms could avoid penalties if they "quietly censored speech without telling anyone." Musk asserted that while other companies accepted, X refused. He also revealed the fine was directed at him personally, not just the company, calling the move "even more insane."
The penalty has ignited a transatlantic dispute. US Vice President JD Vance criticized the EU, posting it should "be supporting free speech not attacking American companies over garbage." FCC Chairman Brendan Carr accused Europe of "taxing Americans to subsidize a continent held back by Europe's own suffocating regulations." The Trump administration has reportedly pressured the EU to soften its tech rules, warning of potential trade retaliation.
Next Steps and Potential Consequences
X now faces strict deadlines to comply with the EU's demands. The company has 60 days to address the violations linked to its blue checkmark system and 90 days to submit plans to fix its advertising transparency and data access issues for researchers. Failure to comply could lead to additional periodic penalties.
This case sets a powerful precedent under the Digital Services Act, which empowers regulators to impose fines of up to 6% of a company's global annual revenue for serious violations. It signals the EU's firm intent to enforce its digital rulebook, putting global tech giants on notice about operational transparency and user protection within its borders.
