European Union authorities caution that Company X could incur penalties due to allegedly misleading voting badge mechanism, according to a recent statement.

The European Union has issued warnings against Elon Musk's social media platform, X, indicating potential severe penalties due to regulatory concerns over its user verification system. This comes after preliminary findings from an ongoing investigation highlighted non-compliance with the Digital Services Act (DSA).

The European Commission has stated that if these initial results are confirmed through further inquiry, X may face fines up to 6% of their global turnover. The platform is said to have violated the DSA in three significant ways: misleading users by awarding blue checks – previously an indicator of credibility – to unreliable accounts; denying researchers access to data such as public posts; and operating a substandard advertising oversight system, which hinders scrutiny on ads, including those deliberately fraudulent.

Thierry Breton, the Commissioner for the Internal Market of the European Union, expressed that while blue checks used to signify reliable sources in the past, X's implementation seems to be misleading users and infringing upon DSA regulations.

Despite having an opportunity to respond, Breton has indicated that should the commission's conclusions stand, fines will be imposed, accompanied by necessary changes at the platform. The European Commission continues its investigation into X for potential non-adherence to the DSA in handling illegal content and disinformation on their site. This marks the initial findings under this legislation against a company for breaches of regulation.

While no formal financial figures have been released by Elon Musk's ownership, there are acknowledgments from him that X has witnessed a decline in advertising revenues since his acquisition in 2022 and anticipated revenue to be around $3bn for the year 2023.

The platform introduced premium subscriptions with verification features at an EU-based cost of €8 monthly, which according to Brussels' perspective, has been manipulated by those aiming to deceive users. Evidence suggests that malicious actors have exploited the 'verified account' status for deceptive purposes, mimicking entities such as Nintendo and Tesla or even notable figures like the pope and former US president George W Bush in previous attempts at premium service revamps by X.