X deactivates European Commission’s ad account after the company was fined €120M

X deactivates European Commission’s ad account after the company was fined €120M

X has deactivated the European Commission's advertising account following a €120 million fine imposed by the Commission. The fine was reportedly related to issues concerning blue checkmarks and transparency in advertising practices on the platform.

Context & What Changed

The incident involving X (formerly Twitter) and the European Commission (EC) marks a significant development in the global landscape of digital regulation, particularly concerning the enforcement of the Digital Services Act (DSA). The DSA, a landmark piece of European Union legislation, came into full effect for Very Large Online Platforms (VLOPs) and Very Large Online Search Engines (VLOSEs) in August 2023, aiming to create a safer, more accountable digital space by imposing stringent obligations on major online platforms (source: ec.europa.eu). These obligations cover areas such as content moderation, risk management, transparency in advertising, and protection of fundamental rights online.

X, as a prominent social media platform with a substantial user base within the EU, falls under the VLOP designation, making it directly subject to the DSA's most rigorous provisions and the EC's direct oversight. The European Commission, acting as the primary enforcer for VLOPs, initiated investigations into X's compliance with the DSA. These investigations culminated in a substantial fine of €120 million, reportedly levied due to X's alleged failures in adhering to DSA requirements concerning the transparency of its 'blue checkmark' verification system and broader advertising transparency standards (source: techcrunch.com). The 'blue checkmark' issue likely pertains to the clarity and accuracy of identifying verified accounts, especially after changes to X's subscription model, which could mislead users about the authenticity or authority of information sources. Advertising transparency obligations under the DSA require platforms to provide clear information about who is paying for an advertisement and why a user is seeing it, to prevent manipulative practices and ensure accountability (source: ec.europa.eu).

The pivotal change, and the focus of this analysis, is X's subsequent response: the deactivation of the European Commission's official advertising account on its platform (source: techcrunch.com). This action, taken shortly after the announcement of the fine, represents a direct and unprecedented form of retaliation by a major digital platform against its primary regulator. It moves beyond typical legal challenges or public statements of disagreement, escalating the dispute into an operational confrontation. This move by X signifies a potential shift in the dynamic between powerful tech companies and regulatory bodies, challenging the established norms of compliance and engagement. It raises fundamental questions about the balance of power, the efficacy of regulatory frameworks, and the future of digital governance, particularly for public sector entities relying on these platforms for communication.

Stakeholders

Several key stakeholders are directly impacted by this unfolding situation, each with distinct interests and potential ramifications:

The European Commission (EC): As the primary regulator and enforcer of the DSA, the EC's credibility and authority are directly challenged. Its interest lies in upholding the integrity of the DSA, demonstrating its capacity for effective enforcement, and ensuring a safe and transparent digital environment for EU citizens. The deactivation of its ad account also impacts its ability to disseminate public information and campaigns effectively on X.

X (formerly Twitter): As the regulated entity, X's interests include minimizing financial penalties, maintaining operational autonomy, and shaping a regulatory environment conducive to its business model. Its action of deactivating the EC's account can be interpreted as a defiant stance against perceived regulatory overreach, but it also risks further reputational damage, additional regulatory scrutiny, and potential alienation of users and advertisers who value regulatory compliance and platform stability.

EU Member States: Member states rely on the EC to enforce EU-wide digital regulations, which contributes to a harmonized digital single market. They have an interest in the effective implementation of the DSA to protect their citizens and ensure fair competition. The dispute could impact their own digital communication strategies if platform reliability or regulatory compliance becomes uncertain.

Other Large Digital Platforms (e.g., Meta, Google, TikTok): These VLOPs and VLOSEs are closely observing the dispute. The outcome will set a precedent for how the DSA is enforced and how platforms can or cannot respond to regulatory actions. Their interest lies in understanding the boundaries of compliance, anticipating future regulatory actions, and potentially adjusting their own strategies to avoid similar conflicts or fines. A strong EC stance could lead to increased compliance efforts across the board, while a perceived weakening of regulatory authority could embolden non-compliance.

Advertisers: Businesses and organizations that use X for advertising are concerned about platform stability, the clarity of advertising rules, and the potential for reputational spillover from regulatory disputes. The deactivation of the EC's account, particularly if it signals broader instability or a hostile regulatory environment, could lead some advertisers to re-evaluate their spending on X or demand greater transparency and compliance from platforms.

Users/Citizens: Users have an interest in a safe, transparent, and reliable online environment, free from disinformation and manipulative practices. The dispute highlights the ongoing tension between platform governance and user experience. The 'blue checkmark' issue, in particular, directly affects users' ability to discern credible information sources.

Public Finance: The €120 million fine represents a direct financial impact, potentially contributing to the EU budget. Beyond the immediate fine, the costs associated with regulatory enforcement, legal challenges, and potential future penalties or incentives for compliance also fall under the purview of public finance. The effectiveness of fines as a deterrent and a source of revenue is under scrutiny.

Evidence & Data

The Digital Services Act (DSA) established a comprehensive framework for online platforms, with specific obligations for VLOPs like X (source: ec.europa.eu). Key provisions relevant to this case include Article 27, which mandates transparency reports on content moderation; Article 28, which requires platforms to provide clear information about advertising, including who is paying for it; and Article 34, which obliges VLOPs to conduct annual systemic risk assessments and implement mitigation measures (source: eu-lex.europa.eu). The EC's power to fine VLOPs for non-compliance is enshrined in the DSA, with penalties potentially reaching up to 6% of a platform's global annual turnover (source: ec.europa.eu).

The €120 million fine imposed on X is a significant figure, underscoring the EC's resolve to enforce the DSA (source: techcrunch.com). While the specific details of X's global annual turnover are not publicly available in this context, a fine of this magnitude suggests that the EC views the violations related to blue checkmarks and ad transparency as serious breaches of the DSA's core principles. Previous instances of regulatory scrutiny against X (or Twitter) have included concerns over content moderation during crises, disinformation, and data privacy, indicating a pattern of regulatory challenges for the platform (source: techcrunch.com, author's general knowledge).

X's response—deactivating the European Commission's ad account—is a verifiable action reported by TechCrunch (source: techcrunch.com). This action, while seemingly retaliatory, also has operational implications for the EC, which uses such platforms for public outreach and information dissemination. The EU's digital advertising market is substantial, estimated to be worth tens of billions of euros annually (source: statista.com, author's assumption for context), making compliance with ad transparency rules critical for market integrity and consumer protection. The EC's budget for public communication and advertising, while a fraction of the fine, represents a legitimate operational need that X's action directly impedes.

Scenarios (3) with Probabilities

Scenario 1: Escalation & Prolonged Dispute (Probability: ~40%)

In this scenario, the current conflict intensifies. X might legally challenge the €120 million fine in the European courts, initiating a lengthy and complex legal battle that could span several years. Concurrently, X could maintain its defiant stance, potentially leading to further retaliatory actions against other public entities or stricter content policies that indirectly affect EU interests. The European Commission, in response, might initiate additional investigations into X's DSA compliance, potentially leading to further fines or even more severe sanctions, such as temporary operational restrictions within the EU, although such measures are typically reserved for extreme and persistent non-compliance. This scenario is characterized by a breakdown in constructive dialogue and a protracted period of legal and operational friction between the regulator and the platform. The reputational damage for both parties could be significant, and the precedent set could encourage other VLOPs to adopt a more confrontational approach to regulation.

Scenario 2: De-escalation & Compliance (Probability: ~35%)

This scenario envisions a resolution where X ultimately complies with the DSA and engages constructively with the EC. Following internal review or initial legal advice, X might decide to pay the €120 million fine, reactivate the European Commission's ad account, and implement the necessary changes to its blue checkmark system and advertising transparency protocols to meet DSA requirements. This could involve a public commitment to compliance and a renewed effort to build a cooperative relationship with European regulators. The EC, in turn, would acknowledge X's compliance and potentially close ongoing investigations, fostering a more stable regulatory environment. This outcome would reinforce the EC's authority and the DSA's effectiveness, signaling to other platforms that compliance is the most pragmatic path. It would also allow X to mitigate further financial and reputational risks, ensuring continued access to the lucrative EU market.

Scenario 3: Stalemate & Limited Systemic Impact (Probability: ~25%)

Under this scenario, the dispute reaches a partial resolution or a prolonged stalemate without significant escalation or full compliance. X might pay the fine but refuse to reactivate the EC's ad account, or reactivate it under restrictive conditions. The EC might not impose further immediate sanctions but would maintain X under heightened scrutiny, with ongoing, low-level investigations. The situation becomes a symbolic standoff, where neither party fully concedes, but neither pursues extreme measures. The direct impact on X's broader operations or the EC's overall regulatory agenda might be limited, but the underlying tensions would persist. This scenario could lead to a 'wait-and-see' approach from other platforms, potentially creating ambiguity in the enforcement landscape. Public communication by the EC on X would be hampered, but alternative platforms or direct communication channels would be increasingly utilized. This outcome suggests that while the DSA's authority is tested, its fundamental framework remains intact, albeit with a notable exception in X's full cooperation.

Timelines

DSA Implementation: The Digital Services Act became fully applicable to VLOPs and VLOSEs, including X, in August 2023 (source: ec.europa.eu). This marked the beginning of the period during which platforms were expected to be fully compliant with the new rules.

Investigation Leading to Fine: The European Commission likely initiated its investigation into X's compliance with DSA provisions, particularly regarding blue checkmarks and ad transparency, sometime after August 2023. The duration of such investigations can vary, but typically involves information requests, risk assessments, and dialogue with the platform. The fine was announced and imposed around December 2025 (source: techcrunch.com).

X's Appeal Process: If X chooses to appeal the €120 million fine, the initial appeal would likely be filed with the General Court of the European Union within two months of the fine's official notification (source: eu-lex.europa.eu). The General Court's ruling could take 1-3 years. Further appeals to the European Court of Justice could extend the process by an additional 1-2 years, meaning a final legal resolution could be 3-5 years away.

Potential for Further EC Actions: The EC has the power to initiate new investigations or impose further interim measures if X continues to be non-compliant or engages in actions that undermine the DSA's objectives. Such actions could be taken within weeks to months following X's continued defiance, depending on the severity and nature of any new breaches (source: ec.europa.eu).

Reactivation of EC Account: The timeline for the reactivation of the European Commission's ad account on X is entirely dependent on X's decision-making and any potential agreement reached with the EC. This could range from days (if X quickly reverses course) to indefinitely (if a stalemate persists or X maintains its stance).

Quantified Ranges

Fine Amount: The specific fine imposed on X is €120 million (source: techcrunch.com). This figure represents a direct financial penalty for alleged non-compliance with the DSA.

Potential Maximum DSA Fines: Under the Digital Services Act, VLOPs can face fines of up to 6% of their global annual turnover for serious and repeated breaches (source: ec.europa.eu). While X's precise global annual turnover is not publicly stated in the provided context, for a large-cap tech company, 6% of turnover could potentially amount to hundreds of millions or even billions of euros, depending on the company's financial scale. This indicates that the €120 million fine, while substantial, is within the broader range of penalties the EC can impose, and potentially far from the maximum possible if violations were deemed more severe or systemic.

EU Digital Advertising Market: The European Union represents a significant market for digital advertising, with annual revenues estimated to be in the tens of billions of euros (source: statista.com, author's assumption for context). X's participation in this market, and its compliance with advertising transparency rules, is therefore critical for maintaining fair competition and consumer trust across a substantial economic sector.

Costs of Compliance: For VLOPs, the estimated annual costs of complying with the DSA's various provisions, including risk assessments, content moderation, and transparency reporting, can range from millions to tens of millions of euros (source: author's assumption, based on industry estimates for similar regulations). These costs include investments in technology, personnel, and legal expertise.

Risks & Mitigations

Risks for X:

Reputational Damage: The perception of X as defiant or non-compliant with major regulatory frameworks could erode user trust, deter advertisers, and alienate public sector entities. This could lead to a decline in user engagement and advertising revenue.

Further Fines & Sanctions: The EC could impose additional, potentially higher, fines for continued non-compliance or for the retaliatory action itself. Ultimately, in extreme cases of persistent non-compliance, the DSA allows for temporary operational restrictions within the EU (source: ec.europa.eu).

Advertiser Exodus: Brands and organizations, particularly those with strong ESG (Environmental, Social, and Governance) commitments, may reduce or cease advertising on X to avoid association with a platform perceived as hostile to regulation or unreliable.

Legal Costs: Engaging in a prolonged legal battle with the EC will incur significant legal fees and divert internal resources.

Mitigations for X:

Legal Challenge: Pursue a robust legal challenge against the fine, focusing on procedural irregularities or misinterpretations of the DSA, while simultaneously engaging in constructive dialogue with the EC.

Proactive Compliance: Publicly commit to and demonstrate efforts towards full DSA compliance, including immediate adjustments to blue checkmark policies and advertising transparency, and reactivating the EC's ad account.

Public Relations Campaign: Launch a transparent communication campaign to explain its position, address concerns, and highlight its commitment to user safety and platform integrity, while avoiding confrontational rhetoric.

Diversify Revenue Streams: Reduce reliance on advertising revenue in the EU by exploring alternative monetization strategies.

Risks for the European Commission:

Perceived Overreach/Abuse of Power: If X successfully frames the fine or the EC's actions as disproportionate or politically motivated, it could undermine public and industry trust in the EC's regulatory authority.

Legal Challenges: An unsuccessful defense against X's legal appeal could weaken the EC's enforcement powers and set a negative precedent for future DSA cases.

Undermining Trust in Digital Governance: A prolonged, acrimonious dispute could create uncertainty for other platforms and potentially lead to regulatory arbitrage, where companies seek to operate in less regulated jurisdictions.

Operational Impact: The deactivation of its ad account directly impedes the EC's ability to communicate effectively with EU citizens on a widely used platform, potentially affecting public awareness campaigns or crisis communications.

Mitigations for the European Commission:

Clear Communication: Maintain transparent and consistent communication regarding the rationale for the fine and the legal basis for its actions, ensuring public understanding and support.

Robust Legal Defense: Prepare a strong legal defense against any appeal by X, demonstrating the thoroughness of its investigation and the validity of its interpretation of the DSA.

Consistent Enforcement: Apply the DSA consistently across all VLOPs to avoid accusations of singling out specific platforms, thereby reinforcing the fairness and impartiality of the regulatory framework.

Collaboration with Member States: Work closely with EU member states to ensure a unified front and coordinated response to platform non-compliance, leveraging national digital services coordinators.

Systemic Risks:

Regulatory Fragmentation: If the EU's assertive stance leads to similar but divergent regulations globally, it could create a fragmented internet, making it difficult for platforms to operate consistently across jurisdictions.

Chilling Effect on Innovation: Overly burdensome or confrontational regulation could stifle innovation and investment in the digital sector, particularly for smaller players who lack the resources for extensive compliance and legal battles.

Erosion of Public Sector Digital Presence: If platforms become unreliable or hostile to public entities, governments and agencies may struggle to reach citizens effectively online, impacting public service delivery and democratic engagement.

Sector/Region Impacts

Digital Platforms Sector: This incident will significantly impact the entire digital platforms sector, particularly VLOPs and VLOSEs. It signals a new era of assertive regulatory enforcement, especially in the EU. Platforms will likely face increased pressure to invest heavily in compliance infrastructure, legal teams, and public affairs to navigate complex regulatory landscapes. The cost of doing business in highly regulated markets like the EU is expected to rise. Platforms may also re-evaluate their risk appetite for challenging regulators, potentially leading to more cautious approaches to policy changes and content moderation.

Advertising Industry: The advertising industry will be directly affected by shifts in platform behavior and regulatory requirements. Increased transparency demands under the DSA will necessitate changes in how ads are targeted, displayed, and reported. Advertisers may prioritize platforms with strong compliance records and stable regulatory relationships, potentially leading to a reallocation of ad spending away from platforms perceived as high-risk. The incident also highlights the need for advertisers to understand the regulatory environment of the platforms they use, as non-compliance can affect campaign efficacy and brand safety.

Governments and Public Sector: Public sector entities, including governments, agencies, and public service organizations, rely heavily on major digital platforms for communication, public information campaigns, and citizen engagement. X's deactivation of the EC's ad account underscores the vulnerability of public sector digital outreach when reliant on private platforms. This incident may prompt governments to diversify their digital communication strategies, explore alternative platforms, invest in owned digital infrastructure, or advocate for stronger regulatory protections for public sector accounts. It also reinforces the importance of clear digital governance policies for public bodies.

EU Region: The EU's position as a global leader in digital regulation is strengthened by its willingness to enforce the DSA against major tech players. This incident reinforces the EU's commitment to its digital single market strategy, aiming for a safer and fairer online environment. Success in enforcing the DSA will enhance the EU's 'Brussels Effect,' where its regulations become de facto global standards due to the size and importance of its market. However, a prolonged dispute could also create friction with other trading blocs or lead to accusations of protectionism.

Global Impact: Other jurisdictions, including the US, UK, and various Asian countries, are actively developing or implementing their own digital regulations (e.g., UK's Online Safety Act, US state-level privacy laws). The EU-X dispute provides a case study in regulatory enforcement and platform response, influencing legislative debates and enforcement strategies worldwide. It could encourage other regulators to adopt similar assertive approaches or, conversely, highlight the challenges and potential backlashes of such strategies. The global tech industry will closely monitor the outcome to inform their international compliance and lobbying efforts.

Recommendations & Outlook

For STÆR's clients in governments, infrastructure, and public finance, this incident necessitates a proactive and strategic approach to digital engagement and regulatory compliance:

1. For Governments and Public Agencies:

Diversify Digital Communication Channels: Reduce over-reliance on single private platforms for critical public information dissemination. Invest in multi-platform strategies, direct communication channels (e.g., official websites, apps), and explore open-source or public-sector-owned digital infrastructure (scenario-based assumption).

Review Platform Engagement Policies: Establish clear guidelines for engaging with major digital platforms, including risk assessments for data privacy, content moderation, and potential service disruptions. Develop contingency plans for platform outages or account restrictions.

Support Regulatory Frameworks: Advocate for robust and harmonized digital regulations that protect public interest communications and ensure platform accountability. Collaborate with national and international bodies to share best practices in digital governance.

2. For Infrastructure and Public Finance Actors:

Assess Digital Risk Exposure: Conduct thorough risk assessments of reliance on major digital platforms for operations, public relations, and investor communications. Identify potential vulnerabilities related to platform stability, regulatory compliance, and reputational risks.

Monitor Regulatory Developments: Stay abreast of evolving digital regulations globally, particularly the DSA and similar frameworks. Proactively engage with policymakers to understand compliance obligations and advocate for practical implementation.

Evaluate ESG Implications: Consider the ESG implications of partnering with or advertising on platforms facing significant regulatory challenges. Non-compliance by platforms can pose reputational risks to partners and advertisers.

3. For Large-Cap Industry Actors (beyond digital platforms):

Proactive Compliance & Engagement: For any large company operating online, prioritize proactive compliance with digital regulations. Establish clear lines of communication with regulatory bodies and engage constructively to address concerns before they escalate to fines or sanctions.

Supply Chain Due Diligence: Conduct due diligence on digital service providers and advertising partners to ensure their compliance with relevant regulations, mitigating indirect risks to your organization.

Internal Digital Governance: Strengthen internal digital governance frameworks, including policies for data handling, content moderation (if applicable), and advertising transparency, to align with evolving global standards.

Outlook (scenario-based assumptions):

Increased Regulatory Scrutiny: We anticipate a global trend of increased regulatory scrutiny on large digital platforms, with more jurisdictions adopting comprehensive digital governance frameworks similar to the DSA (scenario-based assumption). This will lead to higher compliance costs for platforms and a more complex operating environment.

Fragmented Digital Landscape: The current dispute suggests a potential future where the global digital landscape becomes more fragmented, with platforms tailoring their services and policies to specific regional regulatory demands (scenario-based assumption). This could challenge the concept of a truly global internet.

Shift in Power Dynamics: While platforms have historically held significant power, the assertive enforcement by regulators like the EC indicates a gradual shift towards greater accountability and a rebalancing of power in favor of sovereign regulatory authority (scenario-based assumption). This will necessitate a more collaborative, rather than confrontational, approach from platforms.

Innovation in Public Digital Infrastructure: Governments and public sector entities may increasingly invest in and develop their own secure and reliable digital infrastructure and communication tools, reducing dependence on private, often volatile, platforms (scenario-based assumption). This could foster new opportunities for public-private partnerships in digital infrastructure development.

Enhanced Transparency: The focus on advertising transparency and user verification will likely lead to more transparent and accountable digital ecosystems overall, benefiting users and legitimate advertisers (scenario-based assumption). However, the path to achieving this will be marked by ongoing disputes and adjustments.