Australian Court Upholds AU$610,500 Fine Against X For Ignoring Child Abuse Prevention Inquiry

An Australian court has ordered Elon Musk's X to pay a fine of AU$610,500 (US$418,000) for neglecting to respond to a regulator's inquiry regarding practices to combat child abuse.

X faced controversy after failing to comply with Australia's internet safety regulator, the eSafety Commissioner, following which, the latter had issued a notice. X challenged the resulting fine, but the court dismissed the appeal, Reuters reported.

In 2023, the eSafety Commissioner had issued the AU$610,500 fine for failing to effectively respond to questions regarding harmful content involving children on its platform, reported ABC.net.au.

The penalty could attract daily fines of AU$780,000 for each day the company did not respond.

Musk reorganized Twitter into a new firm called X in 2022 after taking the company private. As the restructuring removed its responsibility, X claimed in early 2023 that it was not required to reply to a regulatory notice.

"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," eSafety Commissioner Julie Inman Grant said in a statement.

X Corp's barrister Bret Walker SC argued Twitter's U.S. merger with X Corp invalidated existing sanctions and required penalty proceedings to restart. Countering the argument, Commissioner's barrister Stephen Lloyd stated that Twitter's assets and liabilities transferred to X Corp, maintaining liability, as Twitter wasn't dissolved during the March 2023 merger.

Justice Wheelahan said X was unable to demonstrate that it was excused from answering the regulatory notification.

"The status of X Corp changed so that it became the surviving entity into which Twitter Inc merged," the judge 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."