Opinion
‘Dark patterns’: European Commission is ticked off by Elon Musk’s X, again
Stephen Bartholomeusz
Senior business columnistElon Musk is in strife with the European Commission, once again, with his social media platform X under threat of fines of up to 6 per cent of its global turnover.
It was almost inevitable that X, formerly known as Twitter, would fall foul of the European Union Digital Services Act (DSA) that came into force this year. Since Musk acquired the social media site for $US44 billion (about $65 billion) two years ago, its structure and practices seem to have been re-designed to be in conflict with legislation that regulates content on the big technology platforms.
X owner Elon Musk has had a win in the Australian courts.Credit: Bloomberg
Last year, when Musk withdrew X from the EU’s voluntary code of practice, the region’s internal market commissioner Thierry Breton responded on X.
“You can run but you can’t hide,” he wrote in a post at the time.
Late last year, the EC began a formal investigation of whether X has breached the DSA by disseminating illegal content and by the measures it has taken – or not taken – to combat disinformation. Musk, of course, had dismantled Twitter’s capacity to identify and moderate harmful content almost as soon as he gained control of the platform.
Last Friday, the commission said it had informed X of its preliminary view that it was in breach of the DSA in areas linked to “dark patterns,” or techniques used to manipulate users’ behaviour, advertising transparency and data access for researchers.
The first of the three “grievances” the EC has relates to X’s blue ticks, or check marks.
“X designs and operates its interface for the ‘verified accounts’ with the blue check mark in a way that does not correspond to industry practice and deceives users,” the commission claims.
The blue ticks appear next to the names of X’s premium subscribers, who pay $US8 a month for a symbol that purports to show that their identity has been verified and that they are a reliable source of information.
“Since anyone can subscribe to obtain such a ‘verified’ status, it negatively affects users’ ability to make free and informed decisions about the authenticity of the accounts and the content they interact with,” the EC explained its preliminary finding.
There was evidence of “motivated malicious actors” abusing the verified account status to deceive users, it went on.
The second “grievance” is that X doesn’t comply with the DSA’s requirement for transparency in advertising, and the third is that it doesn’t give researchers access to its public data, as required by the DSA.
Musk, unsurprisingly, responded to the commission’s announcement on X.
“The European Commission offered X an illegal secret deal: if we quietly censored speech without telling anyone, they would not fine us. The other platforms accepted that deal. X did not,” he posted.
Musk didn’t provide any details of the alleged deal, but it is likely that what he regards as censorship, the EC would describe as content moderation.
Breton responded to that post by saying there never had been, and never would be, any secret deal with anyone.
“The DSA provides X (and any large platform) with the possibility to offer commitments to settle a case,” he wrote.
“To be extra clear: it’s YOUR team who asked the commission to explain the process for settlement and to clarify our concerns...up to you to decide whether to offer commitments or not. That is how rule of law procedures work. See you (in court or not).”
X does have an opportunity to respond to the preliminary findings, although Musk has said (again on X) that he was looking forward to “a very public battle in court.”
Because Musk doesn’t disclose X’s financial performance, it isn’t clear how big a fine it might be facing if the EC were to prevail.
Before Musk, Twitter had about $US5 billion in revenue, with about $US4.5 billion of that advertising, but after the billionaire took control of the platform, sacked the content moderation team and invited back users who had previously been banned, advertisers fled. Musk has said that as much as 60 per cent of the advertising revenue – more than $US2.5 billion – had evaporated.
Some of that may have returned, and Musk has also added some revenue from the blue tick subscriptions – but even at its low point for revenue, X would be facing a fine of up to $US150 million.
X isn’t the only big platform provider being targeted by the EC for breaches of the DSA or its sister act, the Digital Markets Act, or DMA, which regulates conduct. Breaches of the DMA can lead to fines of up to 10 per cent of a company’s global turnover.
Late last month, the EC targeted Apple alleging breaches of the DMA because of a preliminary view that its app store rules prevented developers from steering consumers to alternate ways to pay or access content outside the Apple ecosystem.
Google’s parent Alphabet and Facebook’s parent Meta Platforms are also being investigated for potential breaches of the DMA, while Meta, TikTok and X have been targeted for potential breaches of the DSA.
While it is not just the European regulators that have the big platforms in their sights – the US Department of Justice has sued Apple and Google for violating anti-trust laws, and Meta and Amazon have also had legal actions brought against them by the DoJ and other government agencies – the two new European laws are particularly threatening because they were specifically designed for these companies.
In most other jurisdictions, regulators rely on competition and privacy laws not tailored for the platforms and the unique competition and data privacy issues they present. That’s not the case with the DSA and DMA, which were designed for, and only apply to, the largest of the online platforms. The DSA, for instance, only applies to the 20 or so platforms with more than 45 million users.
Given the size of the European Union market, those platforms can’t avoid the reach of these highly prescriptive new laws without significantly damaging their value.
Musk seems to relish a fight, but if X does end up in a European court and loses, it will either have to significantly change its business model and restore some of the functions and oversights Twitter used to have, at considerable cost, or lose most of its European audience. And it will have to pay a hefty fine.
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