Elon Musk’s X Corp loses court challenge over eSafety Commissioner’s child abuse notice

X Corp must comply with an Australian safety notice about child sexual abuse issued to Twitter, a court has ruled.

The US-based social media giant took Australia’s eSafey Commissioner to the Federal Court, arguing it should not have to pay the fine or any further penalties for non-compliance.

The commissioner issued a $610,500 fine to Twitter in October 2023, alleging it failed to adequately respond to questions about harmful content on its platform, particularly child sexual abuse material.

The penalty, issued under Australia’s Online Safety Act, could attract daily fines of $780,000 for each day the company did not respond.

X Corp barrister Bret Walker SC in September argued the commissioner’s sanctions could not be passed on to another company following a merger.

Twitter, incorporated in the US state of Delaware, stopped being a company when it merged with X Corp in Nevada and any penalty process would need to be restarted, Mr Walker said.

But the commissioner’s barrister Stephen Lloyd said the entity known as Twitter was not “dissolved” at the time of the March 2023 merger, and its assets and liabilities should transfer to X Corp.

Justice Michael Wheelahan on Friday agreed, dismissing X Corp’s case.

In published reasons, Justice Wheelahan said the social media company had failed to show that it was not required to respond to the reporting notice.

“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.”

Justice Wheelahan dismissed the proceeding and ordered X Corp to pay the commissioner’s legal costs.