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Global tech

Elon Musk’s microblogging site tried to avoid a $610,500 Australian government fine because its name changed – but lost in court

- October 9, 2024 3 MIN READ
Twitter, X, rebrand, Elon Musk
Photo: AdobeStock
X’s attempt to have a $600,000 fine thrown out as it was issued to its previous company name has been rejected by an Australian court, in a significant legal win for the eSafety Commissioner.

Federal Court of Australia Justice Michael Wheelahan ruled on Friday that X could not wriggle out of an Australian government infringement notice just because it was issued to Twitter, the social media company’s former name.

X had attempted to have the $610,500 fine for an alleged failure to provide information to the eSafety Commissioner about efforts it was taking to address child abuse material on its platform thrown out as it had been issued to Twitter, and the company had since merged to become X Corp.

But the court found that the merger and name change did not mean that X was no longer responsible for previous liabilities, such as the infringement notice.

The eSafety Commissioner has welcomed the ruling, and will now continue its civil proceedings against X attempting to force the Elon Musk-run company to pay the fine in question.

The current legal battles stem from reporting notices the eSafety Commissioner issued to Twitter in early 2023 requiring it to prepare a report on the measures they were taking to deal with sexual exploitation material, sexual extortion, and the livestreaming of abuse on their platforms.

This notice was issued in February 2023, and in mid-March Twitter merged into X and the social media platform was rebranded.

At the end of March, X responded to the notice, but the eSafety Commissioner said not all the information required was provided, with at least 14 questions not answered adequately, including some that were left entirely blank.

After some back and forth with the company, the eSafety Commissioner issued a fine of $16,500 for every day that X failed to provide the information, totalling $610,500.

X was given until November to pay the fine, but instead commenced legal proceedings arguing it was not obligated to do so.

X failed ‘on all its claims’

In the case, X attempted to argue that as the infringement notice was issued to Twitter and the company had since been incorporated in Nevada as X, it was no longer obligated to abide by it.

This was rejected by Justice Wheelahan.

“On 15 March 2023, the status of X Corp changed so that it became the surviving entity into which Twitter Inc merged,” Wheelahan said.

“From the perspective of Nevada law, X Corp’s new status entailed being subject to all the liabilities, including the regulatory obligations, to which Twitter Inc had been subject immediately before it merged into X Corp.

“X Corp has therefore failed to show that it was not required to respond to the reporting notice.

“X Corp has failed on all its claims.”

eSafety Commissioner Julie Inman Grant welcomed the ruling and said that her office would now continue its civil penalty proceedings against X.

“Had X Corp’s argument been accepted by the court, it could have set the concerning precedent that a foreign company’s merger with another foreign company might enable it to avoid regulatory obligations in Australia,” Inman Grant said in a statement.

“eSafety remains committed to exercising provisions available under the Online Safety Act to hold all tech companies to account without fear or favour, ensuring they comply with the laws of Australia and prioritise the safety and wellbeing of all Australians.”

Australia v X

It’s not the first time Australia’s eSafety Commission has clashed in the courts with Musk’s X.

In June this year, the eSafety Commission dropped its court case against X after the Federal Court refused to extend a temporary order for it to hide graphic videos of a Sydney church stabbing.

The Administrative Appeals Tribunal will now consider the merits of the removal notice issued to X by the eSafety Commissioner.

The Queensland Civil and Administrative Tribunal ruled in May that X is subject to local Australian laws despite it being based in the US.

Musk has also recently labelled Australia “fascists” over the federal government’s proposed misinformation law, which could see platforms fined 5 per cent of their global revenue if they fail to prevent the spread of misinformation.

A transparency report released by X last month revealed that the company under Musk is suspending three times as many accounts as Twitter did in previous years, and complying with more government requests to remove certain content.