The European Union has indicated that it could use the revenue from various companies owned by Elon Musk to calculate potential fines against the social media platform X for violating its social media laws. According to information shared with Bloomberg by sources close to the situation, European officials may take into account the annual revenues of Musk’s other companies, such as SpaceX, Neuralink, xAI, and The Boring Company, when determining the fines.
At this point, it is important to note that X is under investigation for potentially violating various provisions of the Digital Services Act (DSA) adopted by the EU in 2022. The DSA requires large platforms to remove posts containing illegal content, and if they fail to do so, they can be held financially accountable. Under the law, regulators can impose fines of up to 6% of a company’s annual revenue. These fines are imposed if companies do not comply with transparency rules or fail to address illegal content or disinformation on their platforms. According to the European Union, the biggest source of disinformation is Elon Musk’s X.
Why is the EU targeting Elon Musk’s companies?
According to insiders familiar with the negotiations among EU officials, the focus is primarily on whether to penalize Musk personally rather than X itself. According to Commission spokesperson Thomas Regnier, the obligations under the DSA apply to the legal entity or individual with a decisive influence over the platform or search engine, regardless of whether that entity is a natural person or a company.
One reason the EU may be focusing on Musk’s other companies could be X’s declining revenue. According to a statement from Fidelity’s Blue Chip Growth Fund, X, valued at $9.4 billion as of August, has lost approximately 80% of its value since Musk’s acquisition.
If fines are imposed on Musk’s companies instead of X, the authorities will calculate the fine based on the annual revenues of several of Musk’s businesses. However, it’s worth noting that Tesla will be excluded from this calculation since it is publicly traded.
Despite these considerations, the Commission has not yet made a definitive decision on whether to impose fines on X. Meanwhile, sources indicate that X could avoid penalties if it addresses the Commission’s concerns. However, Musk’s sharp stance against EU regulations suggests that this option may not be on the table.
The EU and Elon Musk Conflict
Having facilitated X’s withdrawal from the Application Rules, which were initially positioned as mandatory provisions under the DSA in 2023, Elon Musk has since been in conflict with EU officials, particularly Thierry Breton. Although Margrethe Vestager has replaced Breton as the lead on the investigation, there is little expectation that Musk’s approach will change.
Source
Arwen Volkov, A graduate of the University of St. Gallen in Switzerland with a degree in International Finance, Arwen specializes in sustainable finance and green investments. She began her career at an investment bank in London, where she developed financing models for environmentally friendly projects. Known for her analytical and strategic thinking skills, Arwen is a sought-after financial consultant. In her spare time, she mentors fintech startups, contributing to their growth strategies. She is also a nature enthusiast and an amateur photographer.
