The European Union has launched a deeper inquiry into social platform X, just months after its $33 billion xAI deal. The investigation is centered on the corporate structure following the acquisition by Elon Musk’s AI company, xAI. Furthermore, representatives of the European Commission, the EU’s executive branch, have formally asked for more information regarding X’s ownership and governance structure.
The Digital Services Act’s (DSA) increasing pressure on the platform is the reason for this action. Furthermore, the comprehensive law seeks to hold online platforms accountable. Due to Musk’s expanding AI footprint, recent EU investigation efforts have focused mainly on both X and xAI.
EU Increases Pressure After xAI Deal
The European Commission officials want clarity on whether Musk’s AI venture now holds operational control over the platform. This examination comes after an EU investigation into possible DSA violations in December 2023. The DSA establishes strict guidelines for content moderation and transparency that apply to major online platforms. Additionally, there could be severe penalties for any violation. According to reports, regulators are considering fines that could amount to 6% of worldwide turnover. Repeat violations could even see platforms banned from the European market altogether.
The Blue Check Controversy Keeps X in Trouble
The conflict between the EU and X began well before the xAI deal. The Commission released preliminary findings in July 2023, charging X with deceptive design. The blue checkmark was being converted into a premium badge, which was the problem. It made users think that accounts weren’t authentic.
X has defended its stance and denied these claims. Earlier this month, it added a disclaimer to the checkmark feature, most likely to mitigate the impact of potential penalties. Despite this move, regulators continue to investigate.
Both xAI and X have refrained from making any public remarks regarding the latest set of inquiries. However, internal leaks indicate that the Commission is becoming more interested in Elon Musk’s larger tech empire. Additionally, the EU has many legal tools at its disposal to look into these changing structures due to the Digital Services framework.
What Penalties Could Musk’s X Now Face
X may face the first-ever significant penalty under the Digital Services law in the upcoming months. Although there may be delays, a decision is anticipated before the EU’s August recess. Even if the fine is delayed, regulators have the right to publish findings that describe legal non-compliance.
The impact of the xAI deal on enforcement is also critical. According to sources, the penalty level may increase as a result of Musk’s consolidation of power between social media and AI. Some EU officials believe that tighter integration of X into Musk’s AI strategy could increase risks to user data.
Elon Musk will be subject to regulatory scrutiny going forward for his larger business endeavors as well as X. If other platforms under his control exhibit comparable content or governance problems, the EU investigation may broaden to include them. For the time being, the focus is still on how closely xAI is tied to X’s future.
Bottom Line
Elon Musk might have to defend an expanding digital empire rather than just one business as the EU tightens its hold. The result will influence Europe’s Big Tech governance strategy for years to come. This holds whether X receives a harsh punishment or becomes a cautionary tale under Digital Services. Additionally, the case establishes a precedent for the treatment of AI-related acquisitions under EU law. Regulators are keeping a close eye on other tech giants, and they might soon come under the same scrutiny.
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