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Italy Targets Meta, X, and LinkedIn in Landmark Tax Case

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Italy has initiated a landmark tax case, issuing VAT claims against Meta, X, and LinkedIn. The case, which could have widespread implications for the tech industry in Europe, challenges how social networks provide services and treat user data as taxable transactions.

Tax Claims Against Tech Giants

Italy’s tax authorities are claiming substantial amounts from the three U.S. tech giants: Meta (887.6 million euros), X (12.5 million euros), and LinkedIn (140 million euros). These claims span from 2015 to 2022, although the immediate focus is on the years 2015 and 2016, for which claims are set to expire soon.

The Controversial Issue: VAT on Free Services

The central issue in the case revolves around the way these companies provide access to their platforms. Italian authorities argue that the act of users registering on Meta, X, and LinkedIn should be considered a taxable transaction since it involves the exchange of personal data for access to membership accounts.

Meta has strongly opposed this view, asserting that providing access to online platforms should not be subject to VAT. LinkedIn and X have remained silent or unavailable for comment on the matter.

Potential Impact Across the European Union

The case could have wider ramifications across the EU, as VAT is a harmonized tax across member states. Experts suggest that the ruling may force tech companies to reconsider their business models, particularly those offering “free” services that require users to accept profiling cookies. This development could potentially extend to other industries, including airlines and publishers, which rely on similar business practices.

The Path Forward: Court or Settlement?

This is the first time that Italy has issued formal tax assessment notices without reaching a settlement agreement. The companies now have 60 days to appeal the claims, after which they may go to court—a process that could take up to 10 years in Italy. Alternatively, the tax authorities could drop the claims for technical or political reasons, or the companies could agree to pay some of the contested amounts while seeking further assessment from the European Commission.

X to Report First Annual Ad Revenue Growth Since Musk’s Takeover

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Elon Musk’s social media platform X is on track to achieve its first year of advertising revenue growth since Musk acquired the company in 2022. Data from research firm Emarketer, released on Wednesday, suggests that X’s U.S. ad revenue will increase by 17.5% in 2025, reaching $1.31 billion, while its global ad sales are expected to rise 16.5%, totaling $2.26 billion. This growth marks a significant turnaround for the platform, which had struggled to attract advertising revenue following Musk’s acquisition.

Factors Driving Growth

The growth in ad revenue is partly attributed to the return of brands to the platform, bolstered by Musk’s growing influence, particularly within the U.S. Department of Government Efficiency. Jasmine Enberg, principal analyst at Emarketer, noted that some of the growth is driven by a sense of caution, with many advertisers viewing spending on X as necessary to mitigate potential legal or financial risks.

X has also successfully attracted more small- and medium-sized businesses, which had historically been a challenge for the platform to engage. This shift in advertiser behavior is a positive sign for X as it seeks to rebuild its advertising revenue stream.

Industry Competition and Economic Uncertainty

Despite the growth, X’s advertising business remains smaller than it was when Musk took over, as Emarketer’s data points out. In 2021, prior to Musk’s acquisition, X reported ad revenue of $4.51 billion as a publicly traded company. Even with the projected growth in 2025, X’s ad business still lags behind its previous levels.

In the broader social media landscape, platforms like Meta-owned Instagram and TikTok are competing for a larger share of the ad market. However, the overall advertising market could be impacted by factors such as U.S. tariffs and ongoing economic uncertainty. Research firm MoffettNathanson recently revised its U.S. advertising growth forecast, lowering it from 6.9% to 5.8%, citing the disruptive changes brought on by the new administration.

Outlook for X

Despite these challenges, X’s hiring of NBCUniversal’s former advertising chief, Linda Yaccarino, as CEO in 2023 signals a strategic effort to revitalize its ad business. As X looks to grow its advertising revenue, the platform is focusing on broadening its advertiser base and navigating the complexities of an uncertain economic environment.

Elon Musk Issued Summons in SEC Case Over Twitter Stake Disclosure

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Elon Musk, the world’s richest man and a prominent adviser to former U.S. President Donald Trump, has been issued a summons in connection with the Securities and Exchange Commission (SEC) lawsuit against him. The summons and other legal documents were served on March 14 to a security guard at the Brownsville, Texas, headquarters of Musk’s company, SpaceX, according to a court filing on Thursday.

The SEC lawsuit, filed in January, accuses Musk of delaying the disclosure of his substantial stake in Twitter in 2022. The regulator claims Musk violated federal securities law by waiting 11 days past the required deadline to disclose his initial 5% purchase of Twitter’s common shares. Under SEC rules, investors are required to disclose any ownership stake that exceeds 5% within 10 calendar days, which in Musk’s case should have been by March 24, 2022.

Musk and his legal team have not yet responded to requests for comment, and a spokesperson for the SEC declined to provide additional details.