Bluesky, the decentralized social media platform championed as an alternative to Elon Musk’s X, has come under scrutiny from the European Commission for failing to meet transparency requirements under the Digital Services Act (DSA).
Flagged for not publicly disclosing user numbers or its legal entity within the EU (via Financial Times), Bluesky now faces a regulatory hurdle that highlights the tensions between decentralized platforms and centralized oversight. While the issue appears to stem from a technical oversight, the inquiry underscores broader questions about how emerging platforms scale while staying compliant.
“All platforms in the EU . . . have to have a dedicated page on their website where it says how many users they have in the EU and where they are legally established,” said commission spokesman Thomas Regnier. “This is not the case for Bluesky as of today. This is not followed.”
The EU has reached out to member states to verify Bluesky’s operational presence but has yet to contact the company directly. For Bluesky, resolving this matter is both a procedural necessity and a litmus test for its ability to align with regulatory expectations while maintaining its commitment to decentralization. Technically, it should be easy and quick to achieve, just adding a tracker for user stats somewhere and registering an official address in the EU for legal matters.
Explosive Growth Meets Operational Growing Pains
Bluesky’s user base has surged to over 22 million, with more than a million users joining daily in recent weeks. This growth has been fueled by dissatisfaction with X, formerly Twitter, following controversial decisions by Elon Musk. Policy changes—including reduced blocking functionality and the use of user data for AI model training—have driven users away from X, as has Musk’s public endorsement of Donald Trump during his re-election campaign.
However, this rapid growth has not been without challenges. In just a single 24-hour period, Bluesky recently processed over 42,000 user complaints, ranging from spam to severe cases involving child exploitation. The platform’s moderation system, designed for scalability but not yet fully optimized, relies on a triage approach to prioritize critical cases. These growing pains reflect the complexities of balancing decentralization with user safety.
Bluesky’s Evolution: From Twitter Experiment to Global Player
Bluesky was born in 2019 as a Twitter initiative under Jack Dorsey and then-CTO Parag Agrawal, aimed at exploring decentralized social networking. After securing $13 million in funding from Twitter, the project developed the AT Protocol and spun off as an independent public benefit corporation in 2021. This independence allowed Bluesky to position itself as a decentralized alternative to traditional platforms, attracting users disillusioned with X.
Despite its success, Bluesky’s financial sustainability remains uncertain. The platform’s primary revenue stream—selling domain-linked usernames—has raised concerns about scalability. CEO Jay Graber, known for her expertise in cryptocurrency, has yet to announce a comprehensive monetization strategy. As Bluesky’s user base grows, developing a robust financial model will be essential to supporting its operations.
Regulatory Challenges in a Global Context
Bluesky’s regulatory scrutiny is part of a larger trend toward increased oversight of digital platforms. The EU’s DSA represents one of the most comprehensive frameworks, requiring transparency and accountability from all online platforms. While Bluesky’s non-compliance with reporting requirements is administrative in nature, other platforms like X and TikTok face more severe allegations, including misinformation and the misuse of AI algorithms.
Bluesky’s rise underscores the promise and pitfalls of decentralized technology. By prioritizing user control and privacy, the platform has set itself apart from centralized competitors.
However, its rapid growth has exposed vulnerabilities in its moderation system and operational infrastructure. The EU’s concerns over transparency, while easily addressable, highlight the ongoing tension between the ideals of decentralization and the realities of regulatory compliance.
