The European Union is reviewing Elon Musk’s acquisition of the social media platform X by his AI company, xAI, for possible violations of the Digital Services Act (DSA).

The deal, completed in March, placed X under xAI’s control and valued the AI company at US$80 billion.

According to sources familiar with the matter, the European Commission has sent additional inquiries to X regarding its corporate structure following the acquisition.

The regulator is evaluating whether the merger could affect the scale of any potential fine, as penalties under the DSA are linked to global revenue.

The Commission may impose its first fine under the DSA for X’s alleged violations before its summer recess in August.

However, sources have indicated that the timeline and size of the penalty are still uncertain. X can also choose to address the EU’s concerns to avoid a fine.

X did not immediately respond to a request for comment.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ EU tech fines face diminishing returns as deterrents despite escalating amounts

The EU’s potential fine against X represents a growing trend of substantial penalties that nevertheless have limited deterrent effect on wealthy tech companies.

Despite the EU issuing some of its largest antitrust fines to tech giants—including €4.3 billion to Google in 2018 and €1.8 billion to Apple in 2024—these penalties often amount to a small fraction of their operational capabilities 12.

For context, when Google was fined $2.9 billion in 2024, the company could pay this off in less than three weeks given its free cash flow of $47.9 billion in just the first three quarters of that year 3.

The pattern is consistent across the industry. For example, Meta was fined €228 million in April 2025 for its “pay or consent” advertising model, which it could settle in approximately 36 hours based on its cash flow 3.

This financial reality creates a fundamental challenge for regulators. When penalties that appear enormous to the public represent merely days or weeks of revenue for tech giants, they risk becoming viewed as a predictable cost of doing business rather than a behavioral deterrent.

2️⃣ Corporate structure manipulation emerges as a regulatory battleground