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US Justice Department backs X's bid to annul the EU's 120 million euro DSA fine
America's Justice Department has applied to back X's bid to annul a 120 million euro fine the European Commission imposed under the Digital Services Act. The first DSA penalty, over X's blue checkmarks, now has a government arguing each side before the EU General Court.
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What happened
- The European Commission fined X 120 million euros late last year for breaching the EU's digital regulations, a move that raised tensions with Washington.
- Regulators said X's blue checkmarks broke the rules because they involved deceptive design practices that could expose users to scams and manipulation.
- The US Justice Department said Thursday it had filed an application to support X's bid to have the case annulled at the EU's General Court.
- It was the second time in three months that the Justice Department had intervened to defend a company owned by Elon Musk.
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Why it matters
- constraint The first DSA penalty is aimed at how a verification badge was designed, so EU product teams have to treat paid badges and similar trust signals as a compliance question while the case runs.
- decision A platform deciding whether to contest a DSA finding cannot plan on US government backing, because both of the department's recent interventions were for companies Musk owns.
- contradiction Washington says the fine matters for every US digital service in the EU, while Brussels says the case will change nothing in wider relations.
The Justice Department's case, in the parts quoted publicly, is about reach. Assistant Attorney General Brett Shumate of the department's Civil Division said the "European Commission inappropriately attempted to expand its regulatory authority to reach American companies not present or operating within its jurisdiction" [8]. "We will not tolerate the European Commission engaging in regulatory overreach to try and control American engines of innovation and economic growth," he said [9]. The department warned that the fine, if upheld, "may have significant implications" for US online platforms and other companies providing digital services in the EU [7].
US officials have also criticised the rulebook as amounting to online censorship [15].
Brussels answered on sovereignty. Commission spokesperson Thomas Regnier said it is the EU's "sovereign right" to draft legislation aimed at protecting its citizens [10]. "We are enforcing our legislation objectively, transparently and with a solid case," he told reporters. "We are ready to defend our position in court. We have a lot of evidence at our disposal, and it will be for the court to decide as always." [11] Asked whether the Justice Department had told the Commission it intended to back Musk, Regnier said: "We do not need to be informed about anything." [12]
The department's warning covers every American company providing digital services in the EU [7]. Its interventions so far have been for companies Musk owns [5]. In July it filed a motion to intervene in a civil rights lawsuit against xAI [6]. The NAACP and other groups allege xAI is illegally running dozens of natural gas turbines to power a $20 billion AI data center in Mississippi without a permit, in violation of the Clean Air Act [6].
For a team shipping product into the EU, I think the filing changes who argues in court more than who enforces. The Commission is the top enforcer of the 27-nation bloc's DSA, a law that requires tech companies to clean up their platforms under threat of hefty financial penalties [14]. X's fine was the first penalty under the bloc's rules on online content, and it followed a two-year investigation [2]. The finding under challenge concerns how a verification badge was designed [3].
Regnier said the Commission does not expect the case to hurt broader relations with Washington, including talks to limit the damage from Trump administration tariffs. "From our perspective, nothing will change because of a DSA case," he said [13].
What to watch
- How the EU General Court handles the Justice Department's application and X's annulment bid, which will be the first court test of a DSA penalty.
- Whether the Justice Department files in support of a platform not owned by Musk in any later DSA case.
- Whether the Commission's line that nothing will change holds in the Brussels-Washington tariff talks.