Summarize

Simplifying... Inshort

The European Commission has ruled that tech company X doesn't need to share data with rivals as it's not a significant gateway for businesses to reach consumers.
However, X isn't off the hook entirely, as it still faces scrutiny under the Digital Services Act (DSA) for potential breaches, which could result in hefty fines.
The EU will also continue to monitor X's market position, meaning its regulatory status could change in the future.

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X is not bound by DMA rules

Why X need not share data with rivals in Europe

By Dwaipayan Roy

Oct 16, 2024

08:07 pm

What's the story

Elon Musk's social media platform, X, has been excluded from the European Union's Digital Markets Act (DMA) regulation. The European Commission announced the decision today. This means that X will not be bound by the DMA's operational guidelines concerning sharing data with rivals, and getting user consent for tracking ads anytime soon.

Regulatory implications

X not a significant gateway for businesses

The DMA regulation mainly focuses on Big Tech companies, with rules aimed at ensuring fair dealings with individual and business users. So far, seven companies have been designated as DMA gatekeepers for 24 "core platform services," including social media giants such as Meta and TikTok. However, the Commission has ruled that X is not a major gateway for businesses to reach consumers, thus its exclusion from this regulatory framework.

Regulatory relief

X's exclusion from DMA may impact Musk's ego

The Commission's decision to keep X out of the DMA regulation could be a double-edged sword for Musk. On one hand, it liberates him from the regulatory risk of being placed under the bloc's flagship market contestability regime, where penalties for violations can go as high as 10% of global annual turnover. On the other hand, the reason behind X not being a significant gateway for businesses might bruise his ego.

Market watch

EU to continue monitoring X's market position

Despite the current decision, the EU has said that it will continue to monitor developments in X's market position. If there are significant changes in market power, it could reconsider its designation. This ongoing scrutiny shows that while X is currently exempt from DMA regulation, its future status may be subject to change based on its evolving role in the digital marketplace.

Compliance challenges

X still faces regional compliance issues under DSA

Despite being exempted from DMA, X still has to deal with multiple regional compliance challenges under the bloc's Digital Services Act (DSA). Under this act, X will have to meet general governance rules and additional requirements in areas like algorithmic transparency and accountability. The Commission, which enforces these DSA rules on major platforms, suspects X of several DSA breaches and has started investigations that could lead to fines of up to 6% of its global annual turnover if confirmed.