Elon Musk's X social network received the European Union's first penalty under the Digital Services Act (DSA)—a €120 million ($140 million) fine that, while lower than anticipated, marks a significant escalation in transatlantic tensions over tech regulation and free speech.

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The European Commission concluded that X's paid verification system misled users, the platform blocked researchers from accessing public data, and it failed to establish a proper advertising repository. Regulators opted to base the fine on proportionality principles rather than revenues from Musk's broader business empire, which they had previously considered targeting.

The decision drew swift condemnation from U.S. officials. Vice President JD Vance declared, "The EU should be supporting free speech not attacking American companies over garbage," while FCC chair Brendan Carr charged that "Europe is fining a successful U.S. tech company for being a successful U.S. tech company."

Though the fine represents a tiny fraction of Musk's $467 billion wealth, the move underscores deepening divisions between the U.S. and EU over digital sovereignty, content moderation, and fundamental rights in the internet age. X has 60 days to propose solutions and 90 days to implement changes or face additional penalties.

Blue Tick Deception at Core of Violations

The Commission found X's verification system—which allows anyone to purchase a blue checkmark through its Premium subscription—deceives users by failing to meaningfully verify account authenticity. "Deceiving users with blue checkmarks, obscuring information on ads and shutting out researchers have no place online in the EU," said Henna Virkkunen, the EU's executive vice-president for tech sovereignty, security and democracy.

The paid verification system, implemented after Musk acquired Twitter in late 2022, marked a departure from traditional social media verification that requires proof of identity. To obtain a checkmark under X's system, accounts need only a display name, profile picture, confirmed phone number, and 30 days of activity. The Commission argued this "deception exposes users to scams, including impersonation frauds, as well as other forms of manipulation by malicious actors."

X must now present solutions for bringing its practices into compliance with EU laws or face periodic fines.

Proportionality Over Revenue-Based Penalties

The €120 million fine was calculated based on "the nature of these infringements, their gravity in terms of affected EU users, and their duration," according to the Commission. This approach represented a significant departure from earlier indications that regulators might calculate penalties based on revenues from Musk's entire private business empire.

Under the DSA, which took effect in 2023, the EU can impose fines up to 6% of yearly global revenue for violations. SpaceX, the largest component of Musk's private holdings, has projected 2025 revenue of $15.5 billioin, compared to X’s expected $2.3 billion in advertising sales, according to Emarketer.

The Commission official said the fine would be delivered to Musk and xAI, his artificial intelligence (AI) lab that acquired the X platform earlier this year. Musk has previously indicated he intends to challenge any fine in court, which could delay payment for several years.

Ongoing Investigations and Broader Implications

The Commission's investigation began in December 2023, examining suspected failures to combat disinformation and content manipulation, including "in the context of Hamas' terrorist attacks against Israel." The DSA probe into X's handling of illegal content, election disinformation, and use of Community Notes has not yet reached the preliminary findings stage and could result in additional future fines.

"This has nothing to do with censorship, this is about transparency," Virkkunen said at a Friday briefing, adding that the precedent will help accelerate future investigations. "It took time because our teams wanted to make sure that we had a strong legal basis."

The EU is also investigating several other major U.S. tech firms—including Apple Inc., Alphabet Inc.'s Google, and Meta Platforms Inc.—under the DSA and Digital Markets Act. The bloc recently fined Apple and Meta €500 million and €200 million respectively under its digital antitrust rules, and has issued more than $8 billion in fines against Google and a €13 billion tax order against Apple under traditional competition law.

U.S.-EU Friction Over Digital Regulation

The case has taken on heightened political significance as Musk backed U.S. President Donald Trump's campaign and served as close adviser to the president as head of the so-called Department of Government Efficiency for several months at the start of Trump's current term. The probe comes after months of intense pressure from Trump, who has repeatedly attacked the bloc's fines and regulatory approach toward American tech companies.

Before the fine was announced, X posted in April that if reports of enforcement actions were accurate, "it represents an unprecedented act of political censorship and an attack on free speech." The company stated it had "gone above and beyond to comply with the EU's Digital Services Act" and would "use every option at our disposal to defend our business, keep our users safe, and protect freedom of speech in Europe."

The European Commission has maintained its laws do not target any nationality and that it is defending its digital and democratic standards. Virkkunen emphasized future DSA decisions on companies charged with violations are expected to take less time than the two years required for the X case.