E.U. Prepares Major Penalties Against Elon Musk’s X

European Union regulators are preparing major penalties against Elon Musk’s social media platform X for breaking a landmark law to combat illicit content and disinformation, said four people with knowledge of the plans, a move that is likely to ratchet up tensions with the United States by targeting one of President Trump’s closest advisers.

The penalties are set to include a fine and demands for product changes, said the people, who declined to be identified discussing an ongoing investigation. These are expected to be announced this summer and will be the first issued under a new E.U. law intended to force social media companies to police their services, they said.

European authorities have been weighing how large a fine to issue X as they consider the risks of further antagonizing Mr. Trump amid wider trans-Atlantic disputes over trade, tariffs and the war in Ukraine. The fine could surpass $1 billion, one person said, as regulators seek to make an example of X to deter other companies from violating the law, called the Digital Services Act.

E.U. officials said their investigation into X was progressing independently from tariff negotiations after Mr. Trump announced major new levies this week. The investigation began in 2023 and regulators last year issued a preliminary ruling that X had violated the law.

The E.U. and X could still reach a settlement if the company agrees to changes that satisfy regulators’ concerns, the officials said.

X also faces a second E.U. investigation that is broader and that could lead to further penalties. In that investigation, two people said, E.U. officials are building a case that X’s hands-off approach to policing user-generated content has made it a hub of illegal hate speech, disinformation and other material that is viewed as undercutting democracy across the 27-nation bloc.