X Twitter faces a $400,000 fine for ignoring a request from the Australian Electronic Security Commission. The regulator wants to verify the measures that X is currently taking to combat the alleged distribution of child sexual abuse materials.
To overturn the fine, X Twitter tried to convince Australian judge Michael Wheelahan that X was not obliged to comply with the requirements of the Internet Safety Act sent by Twitter, as Twitter «ceased to exist» a few weeks after receiving the notice — when Musk merged the company into X Corp.
The court summarized the defendant’s arguments: «X Corp was not obliged to prepare any report instead of Twitter Inc, as X Corp was not the same person as the supplier to whom the notice was sent».
But the judge ruled that the fine should be upheld, rejecting «’s naked premise that X did not assume Twitter’s legal liability. X’s argument failed because, under Nevada law, Twitter’s merger with X turned Twitter into a «constitutional legal entity» that then transferred all of Twitter’s legal consequences to X Corp.
Judge Wheelahan emphasized that the Nevada merger law specifically provides that «all debts, liabilities and obligations of the Company shall now be retained by or assigned to the Purchaser, as the case may be, and may be enforced against it to the same extent as if it had assumed or contracted all such debts, liabilities, obligations and obligations».
Since X did not satisfy its claims, the company must cover the costs associated with the appeal, along with the initial fine. According to the Australian government’s review of the Internet Safety Act, X could be liable to pay up to $530 thousand for failing to comply with the reporting notice, potentially more than doubling the costs.
«If the court were to accept X Corp’s argument, it could set a worrying precedent that a foreign company’s merger with another foreign company could allow it to avoid regulatory obligations in Australia», — commented Julie Inman Grant, Australian e-security commissioner.
Moreover, the commissioner noted that any tech company that does not want to be transparent about its steps to combat child exploitation could find itself in a similar situation. It seems that sometimes it is better to be responsible or at least pay a fine.
Source: Ars Technica
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