X Faces European Commission Sanctions
Mejreme Asllani & Anna Toso | 22 April 2025
Summary
The European Commission (EC) is investigating X for allegedly violating the European Union (EU) Digital Services Act (DSA), marking the first major enforcement under this new regulation.
X’s content moderation policy philosophy under Elon Musk’s ownership could fail to comply with EU standards, prompting a fine exceeding USD 1b.
EC will likely initiate legal proceedings against more tech companies in the upcoming months, especially after formalising the Code of Conduct for digital platforms in July 2025.
The European Commission is planning to fine the social media platform X up to USD 1b for breaching the EU Digital Services Act (DSA). The alleged violations include the dissemination of misleading and illegal information and insufficient content moderation. The definitive sentence is expected in the summer of 2025. The DSA and the Digital Market Act (DMA) constitute a legislative framework to establish a level playing field for technological innovation, growth, and competitiveness in the EU. It also seeks to uphold safety and protect fundamental rights of users in the digital sphere, tackling controversial practices such as profiling-based advertisement, especially towards minors.
In April 2023, EC identified X as a Very Large Online Platform (VLOP) due to its user base exceeding 45 million within the EU. This status has obliged the platform to comply with the DSA provisions within 4 months of the designation. Exercising its investigatory power of suspected non-compliance with the DSA, EC initiated formal infringement proceedings against X in December 2023. A critical aspect of the DSA is its enforcement mechanism, which allows for significant financial penalties for non-compliance, potentially reaching up to 6% of a company's global annual turnover.
According to EC’s preliminary findings, X violated the DSA as its crowd-sourced fact-checking system fails to guarantee systematic detection of illegal and inappropriate content, and visibility filtering does not prevent harmful posts from reaching users, albeit on a smaller scale. These allegations highlight X's current philosophy of “freedom of speech” over “freedom of reach”, adopted after Elon Musk took over Twitter, which seems to be incompatible with the DSA. As such, the EU is contemplating imposing a substantial fine on 'X', potentially exceeding USD 1b. In July 2025, the now-voluntary EU Code of Conduct for digital platforms will formally become part of the DSA. The Code’s formalisation might incur additional violations and sanctions on X. Since 2018, this Code has represented a cooperative effort to fight online hate speech. Its initial 34 signatories involved several Big Tech companies, including Twitter, which left the agreement after Musk’s acquisition.
The EU’s potential fine against X carries significant political and operational implications. X has adopted a combative stance, framing the potential fine as "political censorship" and preparing for a "very public court battle," a move that could further strain EU-US relations, particularly in light of Musk’s ties to US President Donald Trump. The US administration previously voiced concerns that the DSA unfairly targets American technology companies, highlighting the geopolitical dimension of digital regulation. Operationally, X faces demands for significant platform adjustments, including enhanced content moderation and transparency, requiring substantial investments and a potential shift in its current permissive approach. From a security standpoint, alleged violations, such as inadequate user verification, increase platform vulnerability to manipulation and disinformation, necessitating crucial security enhancements to comply with the DSA. A potential fine exceeding USD 1 billion would impose a considerable financial burden, despite X’s value of USD 44b, impacting future investments and valuation.
Moreover, the official proceedings against X are only the first instance of EU-wide enforcement of social media companies’ responsibility for their online content. Similarly, in April 2024, EC launched formal investigations against Meta’s Facebook and Instagram. The EU's enforcement action signals its commitment to the DSA, setting a precedent for future regulatory actions against large online platforms like Meta and Apple. The case's outcome could influence global digital regulation, though X's response and potential US political intervention underscore the debate on regulatory oversight versus free speech. The EU's resolve to assert its regulatory authority is evident, even amidst political and legal complexities, making this a pivotal case for global digital governance.
Guillaume Périgois/Unsplash
Forecast
Short-term (Now - 3 months)
It is likely that, when the Code of Conduct formally becomes part of the DSA in July 2025, EC will likely initiate proceedings against more online platforms to investigate their compliance with the additional benchmarks.
It is likely that there will be further public statements from X criticising EU actions.
Medium-term (3-12 months)
There is a realistic possibility that there will be settlement negotiations between X and the EU, contingent on the former’s willingness to implement platform changes.
It is highly unlikely that X’s access will ever be entirely suspended in the EU despite non-compliance due to the high threshold to legally justify such a measure.
This is because A single Member State – Ireland, an EU Member State and host, the location of X’s European headquarters, – would have to take action, and could do so only on the basis of a life- or safety-threatening criminal offence, which is highly unlikely to unfold.
Long-term (>1 year)
It is highly likely that the legal outcome will significantly shape future DSA enforcement and tech platform-EU relations, setting a precedent for global digital regulation.
It is likely that this will raise public questions of legitimacy, wherein democratic governance structures such as the EU will need to overcome criticisms of technocratic elitism and partisan politicisation to gain public support for regulating widely-used privately-owned platforms.
