Musk's First Problem To Face As New Twitter Boss? The Digital Services Act

The European Union passed landmark legislation on Saturday that will force Twitter Inc TWTR and other companies to combat hate speech and misinformation.

What happened: The Digital Services Act (DSA) would compel tech companies to bear responsibility for the information that appears on their platforms, putting an end to a period of self-regulation in which companies set their own content regulations.

Some of the stipulations require companies to remove unlawful content and items more swiftly, explain how their algorithms operate to consumers and researchers, and take greater action against the spread of misinformation.

Companies will face fines of up to 6% of their annual revenue for non-compliance.

The European Commission cautioned Twitter directly on Tuesday, saying it will have to "adapt completely to European rules".

Be it cars or social media, any company operating in Europe needs to comply with our rules – regardless of their shareholding.

Mr Musk knows this well.

He is familiar with European rules on automotive, and will quickly adapt to the Digital Services Act.#DSA

— Thierry Breton (@ThierryBreton) April 26, 2022

Commissioner Thierry Breton added: “Whether on online harassment, the sale of counterfeit products... child pornography, or calls for acts of terrorism... Twitter will have to adapt to our European regulations which do not exist in the United States.”

Why it matters: Elon Musk’s Twitter takeover was largely cradled by the fact that he believes in its potential to be the platform for free speech around the globe and believes free speech is a societal imperative for a functioning democracy, as he noted in an SEC filing.

While defending free speech, the billionaire also appears to be concerned with preserving the 6% in global revenue Twitter could be fined if it breaks the new regulations, making nice with the European Union as he strives to maximize the platform's potential.

By “free speech”, I simply mean that which matches the law.

I am against censorship that goes far beyond the law.

If people want less free speech, they will ask government to pass laws to that effect.

Therefore, going beyond the law is contrary to the will of the people.

— Elon Musk (@elonmusk) April 26, 2022

General outlines for DSA have been agreed to and the legalese must be finalized before the act can be voted into law. The rules are slated to take effect 15 months after the measure is signed, at the latest Jan. 1, 2024.