EU Slaps Massive $140 Million Fine on Companies for Misleading Blue Checkmarks

The European Commission Fines X for Transparency Violations Under the Digital Services Act

X, formerly known as Twitter, has been fined €120 million ($140 million) by the European Commission for breaching transparency obligations outlined in the Digital Services Act (DSA).

The DSA, introduced in 2022, mandates online platforms to remove harmful content and safeguard users’ interests within the European Union. X’s violation marks the first instance of non-compliance under these regulations.

Following a comprehensive two-year investigation, the commission determined that X failed to adhere to the DSA guidelines regarding the effectiveness of measures against information manipulation and the dissemination of illegal content. X, the social networking platform, received the preliminary findings of the investigation in July 2024.

The investigation revealed that X violated transparency requirements through its misleading ‘blue checkmark’ system for ‘verified accounts,’ its opaque advertising database, and its restriction of researchers’ access to public data.

The commission highlighted that X’s blue checkmark system could deceive users as accounts could acquire the verification badge without undergoing substantial identity verification processes. This lack of transparency in account authentication increases the risk of fraud and manipulation on the platform.

Regarding advertising transparency, X’s ad database lacked the necessary accessibility features mandated by the DSA, leading to delays in detecting scams, false advertising, and coordinated influence campaigns. Furthermore, X imposed barriers hindering researchers from accessing crucial public platform data essential for analyzing systemic risks faced by European users.

Henna Virkkunen, the executive vice president for tech sovereignty at the EU, emphasized the importance of upholding transparency and accountability online. She stated, “Deceiving users with blue checkmarks, obscuring information on ads, and blocking researchers’ access are unacceptable practices in the EU. The DSA aims to protect users and empower researchers to uncover potential threats.”

X has been given a 60-day deadline to address the blue checkmark violations and a 90-day timeframe to submit action plans for rectifying the research access and advertising issues. Failure to comply with these directives could result in additional penalties imposed on the platform.

Designated as a Very Large Online Platform (VLOP) under the DSA in April 2023, X reached over 45 million monthly active users in the EU, leading to its classification under the regulatory framework.