The European Union (EU) recently announced that it will officially launch a full investigation into X, a social media platform formerly known as Twitter. This is an unprecedented regulatory action that could see X fined up to 6% of its global revenue if it fails to comply with the terms of the EU's Digital Services Act (DSA). The EU's move is the first under the DSA and could set a precedent for regulation of other major online platforms (VLOPs). The case will clearly show X's peers the strength and enforceability of the DSA, especially with experts saying that companies like Meta will be watching it closely.
"If the EU imposes a large fine, it will be a sign of the EU's firm commitment to fighting the monopolistic practices of big tech companies," said Hugo Shapero, an analyst at Global Data. The investigation into X will not only result in fines but also a potential ban on X's services within the EU. Other social media moguls are expected to be fined for spreading misinformation in the EU in 2024, according to Global Data's latest report.
Platforms that can impact the safety of children, like ByteDance's TikTok, and those that lack effective misinformation protocols, like X, could be driven out by legal pressure, fines, and, as a last resort, a ban on use across the continent.
The source of the investigation is not limited to recent events, as X has had ample time to anticipate and address regulatory issues. The investigation is just the latest scene in a story that began in October 2022, a year after Elon Musk took over Twitter, when he decided to cut about 80% of the workforce. The job cuts affected critical areas such as EU compliance, online trust and safety, and multilingual content management.
Despite Musk's ownership, Twitter's efforts to comply with EU regulations have been limited, and this trend is unlikely to change anytime soon. At the heart of the EU's case against X is the distribution of illegal and manipulated information. The EU has consistently asked X to address issues related to the distribution of false information, manipulation, and illegal content. Failure to comply may result in periodic fines of up to 5% of X's average daily worldwide revenue for failure to comply with EU laws. The imposition of daily fines is likely to be a greater sanction than the EU's ultimate 14-day suspension of services.
