Renamed Twitter and it's okay not to pay? Ilon Musk and X doubled the Australian fine when they tried to cancel it

X Twitter faces a potential fine of $400,000 for disregarding a request from the Australian Cyber Security Commission. The regulator seeks to evaluate the measures X is currently implementing to combat the possible dissemination of child sexual abuse material.

To overturn the fine, X Twitter attempted to persuade Australian judge Michael Wilhahan that X is not obligated to comply with the requirements of the Online Safety Act directed at Twitter, as Twitter "ceased to exist" a few weeks after receiving the notice—when Musk incorporated the company into X Corp.

The judge summarized the defendant's arguments: "X Corp was not required to prepare any report on behalf of Twitter Inc, as X Corp was not the same entity to whom the notice was addressed."

However, the judge ruled that the fine should remain in effect, rejecting the "bare assertion" that X does not assume Twitter's legal liabilities. X's argument failed because, under Nevada law, the merger of Twitter with X transformed Twitter into a "constitutional legal entity," which subsequently transferred all legal responsibilities of Twitter to X Corp.

Judge Wilhahan emphasized that Nevada's merger law specifically states that "all debts, obligations, and liabilities of the Company remain with the Buyer or are assigned to it, depending on the circumstances, and can be recovered from it to the same extent as if it had incurred or entered into all such debts, obligations, and liabilities."

Since X did not succeed in its claims, the company must cover the costs associated with the appeal, in addition to the initial fine. According to a review by the Australian government under the Online Safety Act, X could be liable for up to $530,000 for failing to comply with the reporting notice, potentially more than doubling its expenses.

"If the court had accepted X Corp's argument, it could have created a troubling precedent whereby the merger of a foreign company with another foreign company could allow it to evade regulatory obligations in Australia," commented Australian Cyber Security Commissioner Julie Inman Grant.

Furthermore, the commissioner noted that any tech companies seeking to be opaque regarding measures against child exploitation could find themselves in a similar situation. Sometimes, it appears more prudent to respond or at least to pay the fine.

Source: Ars Technica