Back in 2012, the convention of giving scandals names with a “-gate” suffix reached its inevitable nadir when a U.K. government minister swore at a police officer guarding the main gate at Downing Street, thus giving birth to “Gategate.” So, with Brexit having had a similar impact on the English language as Watergate once did, should we be shaking our heads at…Xexit?
According to Insider, Elon Musk has discussed pulling X out of the European Union because of its new Digital Services Act, which is partly concerned with forcing big online platforms to crack down on disinformation. Musk strenuously denied the report in an X post this morning, calling it “utterly false.”
But even if Musk doesn’t intend to turn his back on the EU, enforcement of the DSA may not leave him with much of a choice if X sticks to its current trajectory. Musk has a strong pro-free-speech stance and—thanks to cost-cutting—not a lot of moderators, so X is more relaxed about disinformation than most of its peers. This has been particularly evident since Hamas attacked Israel, with the resulting flood of disinformation on X last week earning the company the first-ever DSA investigation.
If the probe turns out badly for X, the company could be fined as much as 6% of its global revenues, which would not help CEO Linda Yaccarino’s quest to achieve profitability early next year. But that’s only half the story—for repeated and serious DSA violations, the EU could outright ban X. Musk may have to decide between backing down or walking away. So far, he seems to enjoy goading EU digital chief Thierry Breton, claiming a week ago that he has no idea what disinformation his nemesis is talking about.
Before discussing the implications of a potential European withdrawal, I urge you to take a minute to watch this suddenly hilarious video, from May 2022, in which Musk stands alongside Breton and nods in agreement with the sheer awesomeness of the DSA. “It’s pretty much what you think we should do with the platform?” asks Breton. “Yeah, I think it’s exactly aligned with my thinking,” enthuses Musk. “I agree with everything you say, really.”
Which makes me wonder if Musk actually listened to anything Breton said. But anyway, back to the present.
Xexit (I don’t know how to pronounce that, but it looks good) would obviously have a negative hit on X’s ad revenues, given that the EU is the world’s third-largest economy. It would also put a major crimp in X’s plans to become an “everything app” in the vein of WeChat—though there might be a plausible argument for focusing that pivot on North America first, to make for a leaner operation.
But for Europeans, it would be quite a blow. Although there’s an ongoing exodus away from X—an Xexodus, if you will—many people do still like to use the app, and it’s particularly popular in policy circles. A lot of lawmakers would lose their megaphone of choice, which may explain why Breton just set up an account on Bluesky.
X’s departure would also suggest an uncomfortable trend. Meta’s three-and-a-half-month-old X clone, Threads, has still not launched in the EU, reportedly because of local regulations. In that case, it’s less about the DSA than it is about the antitrust and privacy implications of Threads accounts being tied to Instagram, but the end result would be the same: Europeans can’t play with the same things their American friends can play with. Those who prefer microblogging to TikTok or Insta-style social media would be mostly limited to Bluesky and Mastodon—which are perfectly sufficient services in my opinion, but others may disagree.
More news below.
Want to send thoughts or suggestions to Data Sheet? Drop a line here.
David Meyer
NEWSWORTHY
Beijing strikes back. After the U.S. tightened its export controls on high-end chips that might otherwise be destined for China, Beijing is reportedly dragging its heels on approving Broadcom’s $69 billion VMware acquisition. The Financial Times reports that the Chinese foreign ministry and state council now also get a say in the matter, making it quite clearly political. The news knocked VMware’s share price by 7% in premarket trading.
Google in India. Google held a big Indian event yesterday, where it announced plans to start manufacturing smartphones in the country. Apple started doing the same a few years ago. As Reuters reports, Google also expanded its efforts to lend money to small Indian businesses, as well as individuals. And TechCrunch reports that the company announced generative AI tools that will summarize government-led schemes for users.
Amazon’s Digit. Amazon just started testing a humanoid robot called Digit at a Seattle warehouse. Digit has two legs and two arms, and is initially being used to move around empty tote boxes. According to a Guardian report, Amazon Robotics chief technologist Tye Brady denied Digit’s deployment would lead to job cuts, and suggested warehouses would always need people: “People are so central to the fulfillment process; the ability to think at a higher level, the ability to diagnose problems…I’ve never been around an automated system that works 100% of the time. I don’t think you have as well.”
ON OUR FEED
“It is a tool, and people have responsibility to use it responsibly.”
—Microsoft 365 chief Colette Stallbaumer, telling the BBC that it’s up to users of the new Office-embedded Copilot AI assistant to make clear that they are using it when conversing with other people, as demanded by new AI rules in Europe and China. As the BBC notes: “The EU states that it is up to the firms which develop AI tools to ensure they are used responsibly.”
IN CASE YOU MISSED IT
New York AG accuses Gemini, Genesis, and Digital Currency Group of defrauding investors out of more than $1 billion, by Leo Schwartz
Cybertruck euphoria cut short as a ‘melancholic’ Elon Musk dashes hopes the EV pickup will soon turn Tesla’s sagging fortunes around, by Christiaan Hetzner
Former phone giant Nokia saw a dramatic drop in profits and is now cutting up to 14,000 jobs in response, by Prarthana Prakash
Adobe needed AI ideas fast. CFO Dan Durn shares how a hackathon sparked 100 ideas they whittled down to 5 winners, by Sheryl Estrada
BEFORE YOU GO
Indian internet blackouts. The Washington Post has a sobering piece on how India has more government-ordered internet blackouts than any other country, accounting for more than half of all shutdowns in the past seven years.
The Indian government says the blackouts tamp down unrest, but others say the measures ensure the government commands the public narrative, with evidence of human rights abuses becoming harder to disseminate.
This is the web version of Data Sheet, a daily newsletter on the business of tech. Sign up to get it delivered free to your inbox.
