Assessing the Long-Term Viability of X (Twitter) Under Elon Musk's AI Strategy

The long-term viability of X (formerly Twitter) under Elon Musk's AI-driven strategy hinges on its ability to navigate a dual crisis: regulatory scrutiny and reputational erosion. These challenges, while distinct, are deeply interconnected, creating a volatile environment that could undermine the platform's financial and operational stability.

Regulatory Risks: A Growing Legal Quagmire

X's AI initiatives, particularly the training of its Grok model on user data, have drawn sharp criticism from European regulators. Under the General Data Protection Regulation (GDPR), the platform has been accused of failing to secure informed consent from users, with opt-out procedures buried in complex settings requiring seven steps to disable. The Irish Data Protection Commission (DPC) temporarily halted Grok's training on EU data in response to these concerns, though X did not address the use of data already processed. This highlights a critical regulatory loophole: once AI models are trained on user data, reversing the process-or ensuring compliance with rights like erasure- becomes nearly impossible.

In late 2025, the European Commission escalated its enforcement by imposing a €120 million fine under the Digital Services Act (DSA) for deceptive design practices, poor ad transparency, and obstructing research access to public data. The DSA violation centered on X's blue checkmark policy, which Musk expanded to paying users, blurring the line between verified and unverified accounts and increasing susceptibility to misinformation. According to reports, U.S. officials including Vice President JD Vance framed the fine as an overreach by the EU, accusing it of targeting American tech companies and democratic principles. However, the fine underscores a broader trend: global regulators are tightening rules around digital transparency, and X's resistance to compliance could lead to recurring penalties.

Reputational Damage: Eroding Trust and Advertiser Confidence

Regulatory missteps have compounded reputational risks for X, particularly among advertisers and users. A Kantar survey revealed that nearly 25% of advertisers plan to cut spending on X in the coming year, marking the largest recorded pullback from any major ad platform. Advertisers cite concerns over brand safety, with campaigns occasionally appearing alongside extremist content despite "limited" safety thresholds. In the UK, 51% of non-users and 42% of daily users hold negative views of X since Musk's 2022 acquisition.

Musk's public statements have further damaged trust. His inflammatory tweets during the UK riots and the sharing of a fake article promoting conspiracy theories drew widespread criticism. These incidents, coupled with X's relaxed content moderation policies-such as rolling back rules on misgendering and deadnaming-have left advertisers wary of associating with the platform. According to reports, the reputational fallout extends beyond X: Musk himself ranks as the second-highest reputational threat for companies, according to the Global Risk Advisory Council, due to his controversial alignment with political figures like Donald Trump.

The Long-Term Viability Conundrum

For X to remain viable, it must address both regulatory and reputational challenges. Legally, the platform faces escalating costs from fines and potential lawsuits. The €120 million DSA penalty is merely the first of what could be a series of enforcement actions as the EU and other jurisdictions adopt stricter AI and data governance frameworks. According to analysis, Operationally, X's reliance on AI for content moderation has proven inconsistent, with reports from the Center for Countering Digital Hate and the Anti-Defamation League highlighting persistent issues with hate speech and misinformation.

Reputationally, X's ability to attract and retain advertisers will determine its financial health. Ad revenue constitutes a significant portion of its income, and the exodus of brands could force the platform to pivot toward alternative monetization strategies, such as subscription models or paid verification-approaches that may further alienate users and regulators. According to data, the platform remains a high-risk bet, with its viability hinging on Musk's ability to reconcile innovation with compliance-a balance he has yet to achieve.