The European Union is preparing to impose a substantial fine on Elon Musk’s social media platform, X, potentially exceeding $1 billion, as the company faces increasing pressure for its failure to meet the requirements of the Digital Services Act (DSA).
This regulatory action is part of a broader investigation into X’s content moderation practices, which critics argue have failed to meet European standards for transparency and user safety, reports The New York Times.
A Troubling History of Regulatory Violations
Since Musk’s acquisition of Twitter (now X) in 2022, the platform has struggled to meet the expectations set by European regulators. The EU’s investigation, which began in late 2023, highlights several issues, including X’s lack of transparency regarding its content moderation systems and the algorithms used to recommend posts to users.
These algorithms, critics argue, have played a role in amplifying harmful content such as misinformation, leading to increased scrutiny from the European Commission.
The DSA requires platforms with over 45 million monthly active users to be transparent about their algorithms and take measures to prevent the spread of harmful content. However, X has been slow to comply, refusing to provide sufficient data to regulators for a full assessment of its content moderation processes.
Henna Virkkunen, the EU’s digital chief, stressed that the investigation aims to ensure that X operates in line with these legal requirements.
If the fine is imposed, it could have a serious impact on X’s financial health, which has already been weakened by internal restructuring and mounting debt. With a potential penalty of up to 6% of X’s global revenue, the fine could represent one of the largest penalties ever levied against a tech company under the DSA.
The Merger with xAI: Musk’s Ambitious Play
As X grapples with these regulatory challenges, Musk has made an aggressive move to consolidate his tech empire. In a deal valued at $33 billion, Musk’s AI company, xAI, has acquired X, bringing together the AI infrastructure of xAI with X’s vast user base.
This merger, finalized in March 2025, is designed to integrate advanced AI tools like Grok with the social media platform’s features, allowing for more personalized content and advertising experiences.
The merger has raised eyebrows in the tech industry for its lack of external financial oversight. The deal was completed without the usual third-party reviews or board approvals, leading some to question Musk’s control over the two companies.
By combining xAI’s advanced AI capabilities with X’s data and user base, Musk aims to create a vertically integrated ecosystem that could redefine the way both AI and social media operate.
While this move could enhance X’s monetization strategies, it also deepens concerns over privacy and data control. With more AI features integrated into X, such as Grok-powered chatbots for advertising, there is growing anxiety about how Musk’s platforms will handle user data.
The merger is also part of Musk’s broader plan to integrate AI into every aspect of his companies’ operations.
A Platform Under Pressure
Despite Musk’s bold moves to transform X into a tech powerhouse, the company’s internal struggles continue to hamper its progress. Key departures, including Haofei Wang, the head of engineering at X, have raised concerns about leadership instability.
Wang’s resignation, part of a broader trend of executive turnover, highlights the challenges X faces in executing Musk’s ambitious AI-driven vision.
In an internal communication, Musk admitted in January that X’s financial situation remained precarious, with user growth stagnating and revenue projections falling short. To address this, Musk has turned to new monetization strategies, including raising the price of X Premium+ subscriptions.
However, users have expressed frustration with the rising costs, and there are concerns about whether these changes will significantly improve X’s bottom line.
To increase revenue, Musk is now even considering to sell dormant usernames for $10K upwards, offering verified businesses a unique opportunity for brand visibility.
Rising Concerns: Privacy, Power, and Political Influence
As X evolves, its growing power and influence over digital communication and content have raised concerns about its impact on user privacy and political discourse.
The integration of the Grok AI chatbot into X and its controversial unfiltered responses have only intensified these concerns. The merger has positioned Grok at the center of X’s business model, making it a critical tool for both content moderation and monetization.
Grok’s controversial behavior, including generating offensive content and filtering out responses related to Musk and Trump, has sparked debate about the platform’s accountability. X’s ties to political figures, particularly Musk’s public support for Trump, add another layer of complexity.
Critics argue that Musk’s influence over the platform could shape the political discourse in ways that undermine free speech and fair democratic processes.
