SYDNEY, June 5 (Reuters) - Australia's cyber safety

regulator on Wednesday decided to drop a legal challenge against

Elon Musk-owned X over the removal of videos of the stabbing of

an Assyrian church bishop in Sydney, after a setback last month

in the federal court.

Judge Geoffrey Kennett in May rejected a bid by the eSafety

commissioner to extend a temporary order for the social media

platform to block videos of the knife attack, which Australian

authorities had called a terrorist attack.

Commissioner Julie Inman Grant said in a statement the

regulator had decided to drop its legal action against X.

"Most Australians accept this kind of graphic material

should not be on broadcast television, which begs an obvious

question of why it should be allowed to be distributed freely

and accessible online 24/7 to anyone, including children," Grant

said.

She said a major concern was the ease by which children were

able to access the violent content on X.

Grant said she originally issued X the notice to remove the

video in order to prevent the "extremely violent footage from

going viral", potentially inciting further violence and

inflicting more harm on the community.

"I stand by my investigators and the decisions eSafety

made," she said.

A 16-year-old boy has been charged with a terrorism offence

for the alleged attack in April.

The legal tussle had sparked heated exchanges between Musk

and senior Australian officials including Prime Minister Anthony

Albanese, who called Musk "an arrogant billionaire" for his

objections to take down the video. Musk has posted memes

criticising the regulatory order, describing it as censorship.

Other major platforms such as Meta, TikTok, Reddit

and Telegram, took down the video when asked.

X had blocked Australian users from viewing the posts but

refused to remove them globally on the grounds that one

country's rules should not control the internet.

But the regulator argued that geo-blocking Australians, the

solution X offered, was ineffective because several users used

virtual private networks that disguised their locations.