Elon Musk’s big legal loss for Australia

The Federal Court has ruled that X Corp must comply with an Australian child sexual abuse transparency notice issued to the social media giant when it was still called Twitter.

Australia’s eSafety Commissioner took the case to the Federal Court after X Corp challenged a $610,500 fine in September 2023.

The fine resulted from a breach notice issued by eSafety because X Corp failed to provide information on how it met basic online safety expectations regarding child sexual exploitation and abuse material and activity on Twitter.

But X Corp argued that the notice did not apply because the company did not exist when the notice was issued. The notice was given to Twitter in February 2023 and X Corp came into existence in March 2023.

During a 30-second hearing at the Federal Court in Melbourne on Friday, Judge Michael Wheelahan dismissed the proceedings and ordered X Corp to pay eSafety’s legal costs.

The court published its reasons online.

This case is separate from the lawsuit over a video of a stabbing at a church in Sydney. X Corp opposed a takedown request from eSafety regarding that video, and the commission withdrew the lawsuit in June.

X and eSafety have several ongoing disputes in both the Federal Court and the Administrative Appeals Tribunal.

After Elon Musk acquired Twitter Inc, it was merged with X Corp.

In his decision, Judge Wheelahan says that in the digital age where children’s access to the internet is ubiquitous, the Online Safety Act is an important part of Commonwealth law.

The Online Safety Act notice was issued to Twitter 21 days before Twitter merged with X and ceased to exist.

That notice required an explanation of how the company had met the specified applicable baseline online safety expectations between January 2022 and January 2023.

The committee argued that the report it received did not include diverse responses, was incomplete or inaccurate.

“In some areas data may be unavailable or affected by other restrictions, but Twitter welcomes follow-up and engagement that can help clarify approaches or commitments to security and service in ways that are meaningful to the Commission and users in Australia,” an executive wrote back to the eSafety committee.

Follow-up questions were sent to the social media company, but the company responded that it wanted an extension, and also said that Twitter “no longer exists as a legal entity.”

The Commission has granted two extensions.

A procedural response from X Corp referred to an attached “X Corp Final Submission.” (the successor to Twitter, Inc.)”.

But a month later, eSafety published the breach notice; a specified fine for various alleged violations of the Online Safety Act, totaling $610,500.

In making his decision, Judge Wheelahan reviewed the structure of the laws of Delaware – where Twitter was founded – and the laws of Nevada – where X is registered.

He also found that X Corp had violated the terms of the original notice’s reporting deadline.

Second, the court found that the eSafety Breach Notification had failed to identify a “place” where the breaches occurred.

X Corp argued that this invalidated the notice, but Judge Wheelahan said the error “must be recognized as the result of a process of legal construction,” and ruled against X Corp on the “venue” aspect.