X has lost its case to invalidate a $610,500 penalty issued by the eSafety Commissioner for inadequately reporting on efforts to combat child sexual exploitation and abuse material last year.
The social media giant argued it was not required to comply with the transparency reporting notice because it was issued to its predecessor Twitter Inc, a company that no longer exists.
But on Friday, the federal court found that the regulatory liability was transferred to X and ordered the Elon Musk-owned platform to cover eSafety’s legal bill.
Separately, eSafety is still undertaking civil proceedings to force X to pay the $610,500 fine. Another legal proceeding relating to a takedown notice for videos of the Wakeley Church stabbing is also still ongoing.
The eSafety Commissioner had initially issued a transparency notice to Twitter in February 2023, requiring it to report on the measure against child sexual exploitation and abuse material the social media company had undertaken.
Despite being given a couple of opportunities to comply, eSafety found X’s responses didn’t provide all the required information and claimed that “various responses were absent, incomplete, or inaccurate”, subsequently issuing an infringement notice in September 2023.
As the transparency notice was issued to Twitter before it merged into X on March 15, 2023, the Musk-backed company argued the obligation to comply with eSafety’s transparency reporting notice fizzled away.
Justice Michael Wheelahan was unconvinced, saying in the judgement that “X Corp was required to respond to the reporting notice”.
Referring to the law of Nevada, where X is registered, Mr Wheelahan determined that the “liabilities” transferred from Twitter included non-financial regulatory obligations such as the transparency notice.
eSafety Commissioner Julie Inman-Grant welcomed the decision which avoids setting “the concerning precedent that a foreign company’s merger with another foreign company might enable it to avoid regulatory obligations in Australia”.
However, the fight to get X to pay for its non-compliance with the transparency notice request, made under the Basic Online Safety Expectations, is still ongoing.
“eSafety remains committed to exercising provisions available under the Online Safety Act to hold all tech companies to account without fear or favour, ensuring they comply with the laws of Australia and prioritise the safety and wellbeing of all Australians,” Ms Inman Grant said.
In July, eSafety dropped a federal court case that sought to enforce its removal notice against X, but an independent merits review of the removal notice is still before the Administrative Appeals Tribunal.
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