On Friday, the European Commission levied a substantial €120 million penalty on Elon Musk’s enterprise, X, for breaching the transparency mandates of the Digital Services Act (DSA).

This penalty, roughly $140 million and the inaugural fine under the DSA of the EU, pertains to the “misleading design of its ‘blue checkmark’, the insufficient transparency in its advertising database, and the neglect to grant researchers access to public data,” as stated in an EU announcement.

The “blue checkmark” is pivotal to the decision, emphasizing that the formerly complimentary, now fee-based checkmark gives a misleading impression to users and contravenes the DSA’s ban on deceptive design methodologies. The decision suggests that the blue checkmark complicates the verification of genuine accounts and raises the potential for scams.

“Although the DSA does not require user verification, it clearly disallows online platforms from inaccurately asserting that users have been verified if such verification did not occur,” the ruling asserts.

The ruling also notes a deficiency in transparency within X’s advertising database, observing limited details regarding ad content and sponsors, obstructing scrutiny by both researchers and the public.

Additionally, X did not fulfill its obligation to provide researchers with access to public data as stipulated by the DSA.

This ruling comes after an inquiry that commenced in December 2023 to evaluate whether X breached DSA regulations concerning the dissemination of illegal content and its initiatives to tackle misinformation.

“Misleading users with blue checkmarks, concealing information about ads, and excluding researchers is unacceptable online in the EU,” remarked Henna Virkkunen, executive vice-president for the European Commission for Tech Sovereignty, Security, and Democracy.

X has a period of 60 business days to present strategies to rectify its use of blue checkmarks and 90 days to resolve EU concerns regarding its ad repository and public data access for researchers, or it may incur additional penalties, as per the ruling.