The European Union recently made headlines by formally accusing Company X of breaching regulations outlined in the Digital Services Act (DSA). This marks a significant milestone as it is the first time a company has faced such allegations during the preliminary findings phase of the EU’s investigatory process. The EU’s investigation unearthed several key issues with X’s operations, including violations related to its blue checkmark verification system, transparency obligations regarding advertising, and data accessibility for researchers.
Concerns Over Blue Checkmark Verification System
One of the primary concerns raised by the EU revolves around X’s blue checkmark verification system. The EU found that the system, which allows users to pay for verification, is deceptive and prevents users from accurately assessing the authenticity of accounts they interact with on the platform. Moreover, malicious actors have reportedly been exploiting the system to intentionally deceive users, further exacerbating the issue.
In her statement, EU competition chief Margrethe Vestager highlighted key transparency deficiencies in X’s operations. The EU accuses X of utilizing dark patterns to mislead users, failing to provide an adequate ad repository, and restricting access to data for researchers. These practices run counter to the core principles of the DSA, which prioritizes transparency and accountability among online platforms.
If Company X fails to address the EU’s grievances outlined in the investigation, it could face formal action and fines amounting to up to six percent of its global revenue. Given that X is classified as a Very Large Online Platform (VLOP) and boasts more than 45 million monthly active users in the EU, the potential financial penalties could be substantial. However, since X is a private company, the exact magnitude of the fines remains uncertain.
The EU’s crackdown on Company X reflects a broader trend of increased enforcement of regulatory frameworks for big tech companies. Similar probes have been launched to evaluate the moderation practices of other tech giants such as Meta, particularly in relation to the dissemination of illegal or deceptive content and the protection of vulnerable user groups like children. These investigations underscore the EU’s commitment to ensuring that all online platforms comply with the stringent regulations outlined in the DSA.
The European Union’s accusations against Company X highlight the growing scrutiny faced by tech companies regarding their compliance with regulatory standards. As the digital landscape continues to evolve, maintaining transparency, accountability, and responsible business practices will be paramount for companies operating within the EU and beyond.