Mr Musk's X kept gruesome footage of the Bondi massacre online, eSafety commissioner Julie Inman Grant told an inquiry on Thursday.
She said the technology behemoth, which was successful in overturning a take-down order of footage depicting Assyrian bishop Mar Mari Emmanuel being stabbed, had argued the videos were not worse than a gory movie.
She detailed needing to appeal to X to remove footage of the Bondi massacre, which families of victims had viewed.
"We fought hard against X in terms of not allowing that post-mortem Bondi content," Ms Inman Grant said.
"But these are mainstream platforms that are fighting for the right and ability to distribute and monetise this content."
The focus on big tech will continue on Friday, when artificial intelligence giant Anthropic's Australia and New Zealand general manager Theo Hourmouzis takes the stand.
Some analysts have previously suggested AI models display varying levels of anti-Israel and anti-Jew bias, with advocates warning the technology has the potential to amplify anti-Semitism.
One of the government's top online communications officials will also give evidence.
The royal commission into anti-Semitism is now in its third public block of hearings, following weeks of private testimony.
Since Monday, the inquiry has examined the role of social and mainstream media in perpetuating hate speech.
In her evidence, Ms Inman Grant said overseas anti-regulation governments including the United States were contributing to online hate speech in Australia.
Technology platforms felt empowered to strip back protections given the Trump administration was not seeking to enforce them.
"Technology has never been more powerful and guardrails have never been weaker," she said.
"The geopolitics is very much playing into the fermentation of hate online because the platforms feel protected in rolling back protection."
