The X Fine Highlights Europe’s Growing Regulatory Overreach

The European Commission announced a €120 million fine on X last week for violating its obligations under the Digital Services Act (DSA), provoking a sharp rebuke from the Trump administration and setting up a geopolitical showdown between the EU and the United States over digital platform regulation.

The DSA is a controversial law. Many U.S. policymakers, from Secretary of State Marco Rubio to FTC Chairman Andrew Ferguson, argue that the DSA undermines the free speech rights of American citizens and companies. Indeed, a recent staff report from the House Judiciary Committee noted that the law “includes a wide array of provisions incentivizing tech companies to censor speech, including speech outside of Europe.” And the Future of Free Speech, a nonpartisan think tank, found that under the DSA, “Legal online speech made up most of the removed content from posts on Facebook and YouTube in France, Germany, and Sweden.” Despite the mounting evidence to the contrary, top EU officials continue to insist that the law has nothing to do with censorship.

It is against this existing tension that the European Commission announced its historic fine against X for three alleged violations of the DSA’s transparency obligations. First, it says X’s use of the blue checkmark for verified accounts is a deceptive design practice. Second, it says X has poorly designed its DSA-mandated ad repository. Third, it says X has made it too difficult for researchers to access the platform’s public data.

Of the three complaints, the first is the most troubling. The Commission argues that because any subscriber receives the blue checkmark, it is “difficult for users to judge the authenticity of accounts and content they engage with.” While Twitter (now X) previously had a policy of only providing its blue checkmark for certain noteworthy accounts, Elon Musk famously announced changes to this policy in 2022 after acquiring the platform. While some regulators might prefer something different and some users may even be confused about the changes, labeling this practice “deception” is a vast overstatement, especially considering how much attention this policy has received both on the platform and in the media.

The Commission’s charge suggests that platforms should be hesitant to make changes to their services to avoid accusations of misleading users. Yes, a blue checkmark today means something different than it did a few years ago. But iterating on the design of products and services is exactly how companies innovate. Even Musk has subsequently revised X’s blue checkmark policy multiple times, such as removing it for non-subscribers and then adding it back for certain celebrities and influencers. Regulators should encourage platforms to innovate, not lock them into the first design decision they make in perpetuity.

The other two charges are also problematic. The DSA’s transparency provisions require covered platforms to create an ads repository and make platform data available to researchers. The Commission’s complaint is that X makes it too difficult to access data from its service, and its databases omit critical information necessary for conducting useful research. Ironically, that is the same conclusion ITIF came to about the EU’s own DSA Transparency Database. This does not mean X’s implementation is ideal, only that the Commission’s own systems struggle with similar shortcomings. In this case, the European Commission may want to get its own database in order before going after other platforms for the same issue.

None of these violations is egregious enough to justify such a large fine. When asked to explain how the Commission calculated the amount of the fine, an official reportedly said that there was no “simple economic formula.” In other words, the fine is completely arbitrary.

The EU is right to expect that platforms adhere to its laws—even those that they might disagree with. But it should not expect the U.S. government to ignore foreign laws and regulatory actions that target its companies and citizens. The U.S. government is correct to challenge foreign laws negatively impacting U.S. companies, and the EU should expect that addressing enforcement of these laws will continue to be a priority in ongoing trade negotiations.