Elon Musk’s X Corp loses Aussie legal fight against eSafety Commissioner

US billionaire Elon Musk’s company X Corp has lost a legal challenge against a more than $600,000 fine imposed by Australia’s online watchdog.

Elon Musk’s X Corp, previously known as Twitter, has lost a second legal bid to overturn a penalty imposed by Australia’s online watchdog two years ago.

The US-based social media giant was handed a transparency notice by eSafety Commissioner Julie Inman Grant seeking information about the measures the company was taking to address the proliferation of child sexual exploitation material on its platform.

The reporting notice required Twitter Inc to prepare a report on its compliance with basic online safety expectations between January 2022 and January 2023, with a response required by March 29, 2023.

Twitter Inc was bought by Elon Musk for $44 billion. Picture: Kirsty Wigglesworth / POOL / AFP

X Corp did respond, however the commission argued the reply was inadequate and incomplete, later imposing a $610,500 penalty in September that year.

The company challenged the penalty in the Federal Court of Australia arguing the compliance notice was issued to Twitter a month before that company ceased to exist, when Musk acquired the platform for $44 billion, and therefore was not obliged to respond.

The argument was struck down in October last year by Justice Michael Wheelahan who found the company failed to show that it was not required to respond.

However the case returned before a full bench of the Federal Court in March as the company appealed against Justice Wheelahan’s judgment.

The case was heard in the Federal Court in Melbourne. Picture: NewsWire / Penny Stephens

X Corp’s barrister Bret Walker SC argued the Judge made a mistake in ruling the obligation to respond adequately to the notice continued after the merger of Twitter Inc and X Corp.

He argued Justice Wheelahan had erred by not finding that at the time of the merger Twitter Inc “ceased to exist” and the eSafety Commissioner would have been required to issue a new notice.

The case returned to court on Thursday as Justice Bernard Murphy delivered a judgment against the social media company.

Justice Murphy dismissed the appeal and ordered X Corp to pay the eSafety Commissioner's costs.

The full judgment is expected to be published online.

Australia’s eSafety Commissioner, Julie Inman Grant, hailed the initial ruling last year. Picture: NewsWire / Martin Ollman

After Justice Wheelahan’s initial ruling last year, Commissioner Julie Inman Grant welcomed the Court’s decision.

“Early last year, we asked some of the world’s biggest technology companies, including Twitter, to report on steps they were taking to comply with the Australian Government’s Basic Online Safety Expectations in relation to child sexual exploitation and abuse material on their platforms,” she said.

“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.”

Originally published as Elon Musk’s X Corp loses Aussie legal fight against eSafety Commissioner