Lawyers for Elon Musk's X Corp have argued it should not have to pay a $610,500 penalty from Australia's eSafety Commission as the fine was issued to Twitter, which no longer exists.
The company, represented by Sydney barrister Bret Walker SC, outlined its case in the Melbourne Federal Court on Monday in the first of a two-day sitting into the issue.
The eSafety Commission issued the financial penalty to Twitter in October last year, alleging the social network failed to adequately respond to questions about how it tackled harmful content on its platform, including child sexual abuse material.
Barrister Bret Walker argues that Twitter failed to exist as a company after March 15, 2023. (Bianca De Marchi/AAP PHOTOS)
The fine was the first issued to a digital platform under Australia's Online Safety Act, and could attract retrospective daily fines of $780,000 for each day the company did not respond.
But Mr Walker told Justice Michael Wheelahan the fine had been issued to Twitter which had "ceased to exist" after March 15, 2023 when X Corp merged with Twitter in the US state of Nevada.
"After all the arguments have been trotted through, that will indeed suffice for the proposition concerning the possible application of Section 57 to our client who is X, not Twitter," he said.
"The parties are in lively dispute about what happens upon what I'll call the merger."
Mr Musk registered X Corp in Nevada in early March 2023 and court documents later indicated Twitter had "merged into X Corp and no longer exists as a separate entity".
Twitter, which Mr Musk took over in October 2022, was rebranded as X in July 2023.
The fine from Australia's eSafety Commission came after it issued non-periodic reporting notices to several online firms, including Google, TikTok, Twitch and Discord, in February last year.
Questions posed to the companies asked how they were meeting basic online safety expectations, including attempts to stop the spread of child sexual exploitation and abuse material on their platforms.
"Twitter failed to provide any response to the question, such as by leaving the boxes entirely blank," the eSafety Commission said in a report.
"In other instances, Twitter provided a response that was otherwise incomplete and/or inaccurate."
ESafety Commissioner Julie Inman Grant issued the fine to Twitter in October and also gave a formal warning to Google for "not adequately answering specific questions".
Justice Wheelahan has adjourned the case until Tuesday, when expert witnesses are expected to appear before the court.