Elon Musk‘s X Corp has suffered a significant defeat in the Australian Federal Court, as it has been ordered to comply with a “safety notice” issued by the eSafety Commissioner. The court ruled that the company cannot avoid responsibility for a fine or daily penalty for non-payment and must also pay the Commissioner’s court costs.
In October 2023, the Office of eSafety fined what was then Twitter $610,500 after it failed to adequately respond to questions about harmful content on its platform, particularly child sexual abuse material. This fine, which was issued under Australia’s Online Safety Act, could result in daily penalties of $780,000 for each additional day that the company does not respond.
The notice, which was issued in February 2023, required the platform to prepare a report on its compliance with eSafety’s expectations for the previous year. The deadline for submission was March 29th and included 31 numbered questions with sub-questions.
While some information was provided, the Commissioner informed the court that the responses were either absent, incomplete or inaccurate.
On March 15th, Twitter Inc. merged into X Corp. As a result of this merger, X Corp argued that it should not be held responsible for any fines or penalties imposed by the Commissioner following non-compliance.
However, the Commissioner’s barrister argued that Twitter was not dissolved at the time of the merger and therefore its liabilities transferred to X Corp.
Solicitors for X Corp acknowledged this transfer of assets and liabilities in an April 20th letter to eSafety Office. They stated that “All of Twitter Inc.’s assets… passed to X Corp.” and asserted that there had been no change in control or ownership interests between both companies.
In today’s ruling by Justice Michael Wheelahan at Federal Court level agreed with eSafety Commissioner and dismissed Twitter Inc.’s case. The judge stated that “X Corp became subject to all liabilities…to which Twitter Inc had been subject immediately before it merged.”
Justice Wheelahan dismissed proceedings against X Corp and ordered them to pay legal costs incurred by eSafety Commissioner.
