Billionaire Elon Musk took over the social media giant last year and has since rolled back various rules on content moderation.
Twitter has chosen "confrontation" with the European Commission by leaving the European Union's voluntary code of conduct against online disinformation.
The voluntary code, launched in 2018, currently has 44 online platforms signed up to it, including Meta and Google, with Twitter the only major one to have left it so far.
Věra Jourová, the institution's vice president for values and transparency, told reporters on Monday that the social media giant has made the wrong decision.
"We believe this is a mistake of Twitter. Twitter has chosen the hard way. They chose confrontation," Jourová said.
"This was noticed very much in the Commission and I know the code is voluntary, but make no mistake, by leaving the code Twitter has attracted a lot of attention and its actions and compliance with EU law will be scrutinised vigorously and urgently."
But even if the code of conduct is voluntary, fighting disinformation will become a legal obligation under the EU's Digital Services Act (DSA), which comes into force on August 25 this year.
"If Twitter wants to operate and make money in the European market, it will have to comply with the Digital Services Act," Jourová added.
Twitter's departure will come as no surprise to Brussels, given that billionaire Elon Musk has eased moderation of problematic content since completing his takeover of the social media company last November.
"A lot of people working at Twitter had collaborated with us...It's sad," Jourová said.
"Twitter had very competent and determined [employees] who understood that there must be a certain responsibility, a reinforced responsibility on the part of platforms."
AI content labelling
This also means that, for now, Twitter will not be part of a new voluntary labelling system for generative artificial intelligence content that the European Commission announced on Monday.
It will be incorporated into the current code of conduct, with the aim of helping online users easily identify what is made by AI, combatting disinformation in the process.
"I said many times, that we have the main task to protect the freedom of speech, but when it comes to AI production, I don't see any right for the machines to have the freedom of speech."
The European Commission wants to have the AI labelling system up and running as soon as possible.