The warning came from European Commissioner for the Internal Market Thierry Breton during his video call with Musk earlier in the day, people with knowledge of the conversation told the Financial Times.
Breton, who is in charge of implementing the EU’s digital rules, urged Musk to adhere to a checklist of rules, including ditching an "arbitrary" approach to reinstating banned users, pursuing disinformation "aggressively" and agreeing to an "extensive independent audit" of the social network by 2023, according to the report.
Unless Twitter follows the EU's new Digital Services Act, it could face a Europe-wide ban or fines of up to 6% of global turnover, the report said.
Meanwhile, Musk considers the new legislation "very sensible" and that it should be applied everywhere in the world, sources said.
Twitter, founded in 2006 and established as a social network for exchanging short messages, was bought by Musk in late October for $44 billion. In November, a little over a week after taking over, the South African billionaire started laying off the company's workers in a bid to place Twitter "on a healthy path," which raised a wave of public criticism.
As Musk proceeded on a Twitter 2.0 plan, backlash has only grown for the company, especially after former US President Donald Trump's account was unblocked on November 20. The decision to reestablish the ex-president's platform came after a majority of participants in a survey conducted by Musk voted in favor of the measure.
Trump's account was banned after the US Capitol attack on January 6, 2021, which saw thousands of Trump supporters violently storm the federal building in the hopes of preventing the certification of the 2020 election results.