EU Intensifies Oversight of Musk's xAI–X Deal

Arabian Post

3 hours ago

European Commission regulators have launched an in-depth inquiry into the corporate restructuring of X following its $33 billion acquisition by Elon Musk's AI venture, xAI in March. Officials have issued formal information requests probing whether the deal reshaped the obligations and liabilities under the Digital Services Act, which could trigger fines of up to 6 per cent of global turnover or even a suspension of operations within the EU.
At stake is not merely compliance but scope. Brussels is examining if revenue from Musk's wider corporate empire—including xAI, SpaceX, Neuralink and The Boring Company—should be aggregated with X's earnings when calculating any DSA penalty. Such consolidation would dramatically increase the financial stakes, positioning the potential fine among the largest ever under the regulation.
This intensified scrutiny builds upon a probe initiated in December 2023 over allegations that X failed to curb harmful content and employed deceptive design. The spotlight has honed in on features such as the blue check verification, which critics say misled users into attributing credibility purely on subscription status. X has contested these accusations, reflecting the gravity with which Brussels regards compliance under the DSA.
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Regulatory sources indicate that Brussels aims to reach a decision before its summer recess in August 2025—though there remains a possibility that deliberations will extend. If a penalty is levied, whether tied solely to X or inclusive of Musk's other holdings, the platform could face a multi‑billion‑dollar bill. Repeat offenders risk more severe sanctions, including operational bans within the bloc.
The commission's current line of inquiry follows earlier requests for internal documentation on X's algorithmic decision‑making and moderation protocols issued in January 2025, aimed at uncovering systemic bias or political amplification. EU digital chief Henna Virkkunen has signalled that the commission's enforcement of the DSA will be uniform across all major platforms—regardless of headline-grabbing personalities or companies.
For the xAI–X merger, Brussels appears particularly concerned with whether the March acquisition alters liability thresholds or the classification of X as a 'Very Large Online Platform'—a designation that comes with more rigorous reporting and compliance obligations. The structure of the deal could influence if DSA fines are calculated based solely on X or on the broader Musk group.
European digital regulators are keen to demonstrate the potency of the DSA, which took effect in late 2022, aiming to set a precedent in holding tech giants accountable across interconnected corporate structures. X's contested manoeuvres with the blue checkmark and structural repositioning have become emblematic of the challenges regulators face enforcing meaningful accountability.
Musk's companies have so far declined to respond to the commission's most recent information requests. Meanwhile, EU officials continue to gather internal documents, revenue data and structural filings to determine the extent of exposure under DSA provisions before any final ruling.