Australia's eSafety Commissioner had claimed X and other social media platforms were more correctly regulated under a standard broader than the pre-existing social media services code.
However, the Federal Court ruled on Wednesday that online safety legislation was specifically drafted to rule out a platform being defined as both a "social media service" and a "relevant electronic service".
The commissioner, Julie Inman Grant, had argued the capacity for X users to message and use encrypted chat defined the platform under both standards, meaning it should be subject to stricter rules.
However, Justice Elizabeth Raper found the law did not allow for one service to be subject to both sets of rules simultaneously.
"The X Platform is a 'social media service' ... The Commissioner's construction would not sit comfortably with the (law's) structure," Justice Raper said in her judgment.
"It would allow the Commissioner, as has happened here, to create a standard and apply it to a provider who is already the subject of another industry sector code."
X's barrister Perry Herzfeld SC had argued including the platform in the stricter code for having messaging capability was unreasonable.
"It would be rather perverse for a social media service ... not to enable messaging or chat between end users," he said.
Justice Raper agreed, saying if messaging functionality was enough to make a platform subject to both regulations, "enormous overlap between the two sections of the industry would result".
X further claimed the Commissioner had failed to properly consult with the company before making the change.
Ms Inman Grant's barrister had argued X was given plenty of time to raise objections.
The standard was to come into force six months after it was made public.
A spokeswoman for Ms Inman Grant said while it acknowledged the court's decision, X's attempt to have the entire "relevant electronic service" standard rendered invalid failed.
"eSafety is considering the judgment and next steps," the spokeswoman said.
X's win is the latest development in a string of high-profile slanging matches between the platform and Ms Inman Grant.
The commissioner previously dropped a case against X in 2024 attempting to force the platform to remove a graphic video of the stabbing of a bishop in a Sydney church.
Ms Inman Grant said her and her family received death threats as a result of the legal action and comments from Mr Musk labelling her an "unelected bureaucrat" and the "eSafety Commissar" - the latter a reference to Soviet officials.
However, the commissioner had a win in May when the Federal Court ordered X to pay $750,000 in fines and legal fees for not informing her office of how the platform was stopping child exploitation.
12°C