The European Commission decided Wednesday that under the Digital Markets Act (DMA), X won’t be regulated despite the social media platform hitting usage thresholds earlier this year. The Elon Musk company had submitted arguments against being designated for regulation under the DMA.
The DMA, which entered into force on November 1, 2022, and became largely applicable on May 2, 2023, is a regulatory framework established by the European Union aimed at ensuring a higher degree of competition in European digital markets by preventing large companies, termed as "gatekeepers," from abusing their market power.
So far seven companies have been designated as gatekeepers for a total of two dozen “core platform services,” including other social media giants like Meta and TikTok. But back in May when X notified the EU that it had hit the 45 million monthly active users and 10,000 business users bar, the social media platform also agued against being designated.
“Following a thorough assessment of all arguments, including input by relevant stakeholders, and after consulting the Digital Markets Advisory Committee, the Commission concluded that X does indeed not qualify as a gatekeeper in relation to its online social networking service, given that the investigation revealed that X is not an important gateway for business users to reach end users,” the Commission wrote in a press release.
The decision means that for the foreseeable future, X won’t be subject to the DMA’s list of operational “dos and don’ts” in areas like its use of third-party data and user consent to tracking ads. The Commission however says that it will continue to monitor developments in X’s market position; and could re-visit the designation issue in the case of future substantial changes in market power.
X still faces scrutiny from the EU's Digital Services Act (DSA), a sister regulation to the DMA. Under DSA, It is expected to comply with general governance rules and an additional layer of requirements in areas like algorithmic transparency and accountability, which are reserved for larger platforms. X faces fines of up to 6 percent of total worldwide annual revenue if it's found in violation.
And according to recent Bloomberg reports, unidentified EU official said regulators are weighing whether Musk himself should be fined regarded as the entity as opposed to X itself. This means that fines could be levied on all Musk-owned firms as whole, including SpaceX, Neuralink, xAI and the Boring Company. Tesla "sales would be exempt from this calculation because it's publicly traded and not under Musk's full control," according to the report.
The Bloomberg report drew sharp criticisms online as many legal experts say such move would be illegal. Critics accuse the EU regime of adopting authoritarian and fascist measures against Musk and freedom of expression in the region.
