UK businesses operating on the social media platform X, formerly Twitter, are navigating increasingly perilous waters due to a major regulatory investigation. The catalyst is Ofcom's inquiry into systemic risks posed by Elon Musk's generative AI tool, Grok, specifically its capability to create sexualised imagery.
The Core of the Controversy: Grok AI and Systemic Risk
In January 2026, the UK communications regulator, Ofcom, shifted from commentary to formal procedure. Its investigation centres on whether Grok's design enables the creation and distribution of AI-generated pornographic content on X. This move fundamentally alters the risk exposure for any individual or company using the platform.
While Elon Musk frames the issue as one of free speech, the commercial reality for most businesses is starkly different. Few companies are in business to champion the right to generate explicit content that may appear alongside their promotional tweets. The inquiry suggests that the platform's very architecture, not just content moderation failures, may be at fault, focusing on foreseeable misuse under the Online Safety Act.
Immediate Consequences for Corporate Britain
The ramifications for UK businesses are significant and immediate. Boards are now forced to confront a foreseeable liability that requires urgent risk assessment. Companies must evaluate their continued presence on X, potentially flipping marketing plans and incurring new costs for compliance checks.
Corporate governance experts warn that waiting for a final regulatory outcome is a dangerous strategy. Once a platform enters active statutory investigation for systemic failure, merely maintaining a presence stops looking neutral and begins to resemble negligence or a conscious board-level gamble. Insurers are likely to scrutinise policies, while risk and compliance departments face heightened pressure.
The commercial argument for staying is weakening. UK advertising revenue on X is reportedly down by 60 per cent, largely due to content concerns. The platform now accounts for just 10 per cent of social media visits in the UK—less than its share in April 2017.
Second-Order Effects: Harassment, Impersonation, and Deepfakes
The risks extend beyond pornography. Ofcom's focus on systemic capability opens the door to liability for second-order effects like harassment, executive impersonation, and deepfake fraud. A cited example involves a Hong Kong executive who approved a fraudulent transaction exceeding £20 million after being deceived by an AI deepfake.
As regulators begin to treat such outcomes as predictable rather than rare edge cases, employee safety considerations escalate rapidly. This creates a compounding risk environment that many businesses may now deem unacceptable.
Governance Versus Optics: The Commercial Imperative
Debates about censorship largely miss the key commercial point. UK law has long distinguished between free speech and distribution. The current situation highlights a clash between Musk's ideological stance and the practical duties of corporate governance.
With Musk possessing a personal fortune exceeding $750 billion, enabling him to treat potential fines as trivial, the UK government's position is hardening. Language from the Starmer administration has shifted, making a potential block on the platform no longer "unthinkable," mirroring Italy's 2023 temporary ban on ChatGPT.
For business leaders, the critical question is now: Is X a need-to-have channel? For most, the data suggests not. The decision to remain is often rooted in sunk cost fallacy rather than strategic value. Proactive contingency planning is essential, as waiting for ultimate clarity may unnecessarily damage brands and stretch resources.
The precedent set over the next three years will shape how generative AI capability is governed, influencing future audit trails, insurance terms, and legal defensibility. Companies that distance themselves from platforms seen as minimising drama and pushing agendas may find themselves on the right side of both public opinion and the corporate chequebook.
