European Commission slaps X with €120 million fine over Digital Services Act breach

The ruling, which comes after a two year investigation by the Commission, marks the first time it has exercised its powers under the Digital Services Act to bring action against a major tech company since the laws came into effect in 2023.

Elon Musk, owner of X, took to the social media after the fine was issued to call for the EU to be abolished, while the company’s head of product, Nikita Bier, posted that the EU’s ad account had now been banned from X, claiming it was trying to use an exploit to advertise falsely.

Nils Rauer, a digital transformation expert with Pinsent Masons in Frankfurt, explained: “The DSA was enacted to notably battle illegal content being uploaded to online platforms and into hosting services.

“Equally, the legislator imposed obligations upon service providers safeguarding transparency and a safe online environment. Misleading language has to go. That is the underlying rationale that led to the current fine.”

The fine came after the Commission found the blue checkmark used on the platform for verified users was deceptive, as anyone on X can pay to obtain one without the company confirming who is behind it. The Commission claimed this opens up a greater risk of scams and other fraudulent behaviour on X from malicious actors.

It also cited the platform’s failure to meet the Act’s transparency and accessibility requirements around adverts, saying the design of the company’s advert repository featured issues – such as a lack of information about ads, who paid for them, and delays in processing the repository – which hindered independent scrutiny.

X had also failed to provide researchers with access to public data under the act’s obligations, which are prohibited by the platform’s terms of service.

The Commission said the fine had been issued after taking into account the duration and nature of X’s breaches of the DSA.

“Deceiving users with blue checkmarks, obscuring information on ads and shutting out researchers have no place online in the EU,” said Henna Virkkunen, the Commission’s executive vice-president for tech sovereignty, security and democracy.

“With the DSA’s first non-compliance decision, we are holding X responsible for undermining users’ rights and evading accountability.”

Wouter Seinen, technology law expert with Pinsent Masons in Amsterdam, said the ruling may not be the end of the story, however, as the former Twitter could yet oppose the Commission’s decision.

“X has been given 60 days to remedy the breach and to suggest ways to resolve the issues challenged by the Commission,” he said.

“It remains to be seen how such amendments could look. Other major service providers such as TikTok have already signalled their readiness to make changes to their offerings in order to accommodate concerns articulated by the authority.”

Two years ago the Commission also began investigating if X had breached the Digital Services Act over its failure to combat false information and illegal content. That investigation is still continuing, the Commission said.