According to a recent Bloomberg report, the potential fines stem from alleged violations of the Digital Services Act (DSA), which can amount to as much as 6% of an entity's global annual revenue.

This issue arose after accusations that X, formerly known as Twitter, did not comply with DSA requirements, particularly over changes to the Twitter verification system. The EU Commission preliminarily found that the platform's handling of "verified accounts" deceived users, a point highlighted in a July announcement.

Penalties based on total worldwide turnover usually apply to the "provider" of the platform. However, EU regulators are debating whether the term "provider" should encompass Musk’s other companies, such as Neuralink, xAI, and the Boring Company, based on information from anonymous sources familiar with the situation. Bloomber's sources noted that Tesla’s sales would be excluded from this calculation because it is publicly traded and not fully under Musk's control.

The European Commission has expressed its stance that the responsibility for DSA compliance lies with the provider of the platform, and fines are assessed on global turnover. Thus, identifying the provider accurately is crucial before making a final decision. This stance allows for a broad interpretation of "provider," affording regulators the flexibility to possibly consider Musk-led entities as a whole.

Adding to the complexity, some countries have already lumped Musk's businesses together for financial penalties. In Brazil, around $2 million was seized from a Starlink bank account to settle fines against X.

Moreover, documents related to the EU's Digital Markets Act (DMA) have raised the notion of viewing Musk-led enterprises as a unified "Musk Group" for compliance purposes. EU investigators don't classify X as a "gatekeeper" under the DMA, but the discussion surfaces anew the potential issue of treating multiple Musk-operated entities as a single financial front.

Musk has indicated that he will contest any penalties vigorously and publicly, positing that such a court battle would allow the European public to witness the truth firsthand. The final decision on fines remains under consideration, and any imposition of penalties could significantly increase if regulators decide to include revenues from Musk’s other companies.

EU digital regulatory head Margrethe Vestager, who inherited the authority for DSA fines from Thierry Breton after his resignation, will play a crucial role in the final decision-making process. While X and SpaceX declined immediate comment, industry watchers await further developments in this high-stakes regulatory showdown.