Elon Musk's X has sidestepped the EU's DMA, as the bloc determines the platform does not warrant fairness regulations.

The European Union's Digital Markets Act, or DMA, was Wednesday declared not to apply to Elon Musk's X despite the social media platform having hit usage thresholds earlier this year.
Elon Musk's X has sidestepped the EU's DMA, as the bloc determines the platform does not warrant fairness regulations.

The European Union's Digital Markets Act, or DMA, was Wednesday declared not to apply to Elon Musk's X despite the social media platform having hit usage thresholds earlier this year.

The decision will mean that X will not be submitted to the DMA's list of operational "dos and don'ts" - whether in its use of third-party data and user consent with tracking ads, for instance, for the foreseeable future. The pan-EU regime focuses on Big Tech with up-front rules generally aimed at making sure that Big Tech companies treat individual and business users more fairly in a general sense (to date, seven companies have been designated as DMA gatekeepers for nearly two dozen "core platform services," including other social media giants like Meta and TikTok).

While not exactly joining the DMA gatekeeper club is likely to bring Musk good news - in that he avoids the risk of the regulatory threat posed by being exposed to the bloc's flagship market contestability regime, under which fines for non-compliance can reach up to 10% of worldwide annual turnover (and more for repeat offenders), the reason X isn't being designated might hurt his pride: the Commission has determined that X is not a significant gateway through which businesses can access consumers.

It's like the EU throwing shade on the bottom-feeding caliber of X's ad business these days. Or, tl;dr, if most of your ads are for drop-shipping companies flogging dubious-looking earwax cleaners or polyester rugs so violently patterned they could make a sofa-sitter seasick, your business is irrelevant.

Still, X will no doubt be pleased to flutter free of any DMA risk. The platform had argued its case against being classified when it recently notified the EU that it had passed the 45 million monthly active users and 10,000 business users bar. We have e-mailed X's press line for comment.

After carefully considering all the arguments, including consultations with relevant stakeholders, and following advice from the Digital Markets Advisory Committee, the Commission found that X is not a gatekeeper in respect of its online social networking service because the investigation demonstrated that X is not an important gateway for business users to reach end-users, the press release said.

The EU said it would continue observing market trends in X. If market power underwent significant changes, it might reassess the designation issue. Though with Musk at the controls, and even now pissing off mainstream users, advertisers and businesses, this isn't going to happen.

Though the EU's DMA isn't coming for Musk's X anytime soon, the company still has much regional compliance work to do, including under the block's Digital Services Act, a sister regulation to the DMA.

Under the DSA, X is expected to meet general governance rules and a further layer of requirements over areas such as algorithmic transparency and accountability, areas reserved for larger platforms.

The Commission, which is applying the extra DSA rules to large platforms, already suspects X of a series of DSA breaches and has several ongoing investigations that could result in fines of up to 6 per cent of its turnover worldwide annually in case these are confirmed. So it would yet be possible for Musk's taste for lashing out against public officials to come back to haunt him in the EU.

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2024-10-17 19:34:43