Regulatory Storm Hits xAI: European Commission Launches Formal Proceedings Against Grok AI Chatbot
Brussels draws a line in the sand. The European Commission has fired the opening salvo in what could become a landmark regulatory battle, launching formal proceedings against xAI's controversial Grok AI chatbot. This isn't a preliminary inquiry—it's a full-blown investigation with the bloc's top antitrust and digital rulebook enforcers at the helm.
The Core of the Controversy
While the Commission's statement is typically guarded, the scope is sweeping. Officials are zeroing in on potential breaches of the Digital Services Act (DSA) and Digital Markets Act (DMA)—Europe's twin hammers for reining in Big Tech. Think algorithmic transparency, data handling practices, and whether Grok's integration and market positioning stifle fair competition. The probe signals a fundamental clash between agile, disruptive AI development and the EU's meticulously architected digital governance framework.
A Precedent in the Making
This move places xAI and its flagship product directly in the crosshairs, setting a critical precedent for how generative AI platforms will be scrutinized under Europe's new digital rulebook. For the crypto and tech sectors watching closely, it's a stark reminder: building disruptive technology is one thing; navigating the labyrinth of global regulation is another. The outcome could dictate the playbook for AI deployment across the continent, influencing everything from startup innovation to major platform strategies.
One thing's certain—the lawyers are the only ones guaranteed to see green on this deal. For the rest of the market, it's another layer of regulatory uncertainty to price in, because nothing makes investors more confident than a government probe.
Investigation delayed due to Greenland crisis
According to German news source Handelsblatt, the Commission had planned to start the proceedings under the EU’s Digital Services Act last Monday, but the decision was pushed back as the bloc dealt with US President Donald Trump’s threats to take over Greenland.
This is not the first time X has faced trouble with EU regulators. In December 2025, the platform received a €120 million fine from the EU for breaking the Digital Services Act. The violations included misleading blue checkmarks, not being transparent about advertising, and preventing researchers from accessing the platform.
Trump administration officials had strong words about that fine. Secretary of State Marco Rubio and Vice President JD Vance both criticized it heavily, calling it an attack on American technology platforms.
Focus on risk assessment and content moderation
The latest investigation focuses specifically on whether X properly assessed the risks of its AI chatbot and took enough steps to prevent the creation and spread of harmful content. The Digital Services Act requires large online platforms to identify and address risks related to illegal content and harm to users.
The rapid production of such a large volume of inappropriate images in such a short time period raised alarm bells among digital safety advocates and lawmakers.
The situation has become a test case for how EU regulations will handle emerging AI technologies. While the AI Act has been passed to govern artificial intelligence systems, this case is being pursued under the Digital Services Act, which covers online platform responsibilities.
The investigation could lead to additional fines or requirements for X to change how Grok operates. The Commission has the power to impose penalties of up to six percent of a company’s global annual revenue for serious violations of the Digital Services Act.
X has not yet publicly commented on the new investigation. The company’s handling of the situation will be closely watched as other countries consider their own regulatory responses. Multiple nations have already demanded urgent action to address the chatbot’s ability to create inappropriate images.
Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.
