LOS ANGELES – The battle over a progressive media watchdog organization’s coverage of billionaire Elon Musk’s social media platform X (formerly Twitter) sharpened as Missouri Attorney General Andrew Bailey announced that he ordered his office to investigate Media Matters for America over “allegedly fraudulent solicitation of donations.”
According to a press release: “We have reason to believe Media Matters used fraud to solicit donations from Missourians in order to trick advertisers into pulling out of X, the last platform dedicated to free speech in America. Radicals are attempting to kill Twitter because they cannot control it, and we are not going to let Missourians get ripped off in the process,” said Bailey. “I’m fighting to ensure progressive tyrants masquerading as news outlets cannot manipulate the marketplace in order to wipe out free speech.”
Last month, in U. S. District Court for the Northern District of Texas in Fort Worth, attorney’s for the billionaire’s X corporation filed suit against Media Matters, and its investigative researcher-journalist Eric Hananoki, over an investigative report Media Matters published reporting that Nazi content had run on the X app platform alongside advertisements from major corporations.
The timing of the X lawsuit came as Texas Republican Attorney General Ken Paxton announced on Nov. 20 his office had launched a probe of the Washington D.C. non-profit.
“We are examining the issue closely to ensure that the public has not been deceived by the schemes of radical left-wing organizations who would like nothing more than to limit freedom by reducing participation in the public square,” Paxton said in his press release.
In response to Musk’s X suit, Media Matters President Angelo Carusone said the non-profit would defend itself. “This is a frivolous lawsuit meant to bully X’s critics into silence. Media Matters stands behind its reporting and looks forward to winning in court,” he said in a statement.
The lawsuit also named as a defendant Hananoki, who was the author of the article. Hananoki did not immediately respond to a request for comment.
Late Tuesday afternoon, NBC News reported:
Media Matters for America sued Texas Attorney General Ken Paxton in federal court late Monday, alleging that Paxton violated the First Amendment last month and chilled its work when he opened an investigation into the organization over its reporting into Elon Musk’s X app.
Media Matters said Paxton’s investigation was unlawful retaliation designed to punish it for stories it reported that alleged that major ad campaigns were running next to white nationalist content on X.
The stories contributed to trouble for Musk and X and seemingly helped inspire a massive wave of pullouts by advertisers from the social media platform.
NBC News also reported:
Paxton’s office sent a letter to Media Matters on Nov. 21 demanding a “broad swath of documents” related to its reporting. The demand is intrusive, according to the lawsuit, which says many of Media Matters’ reporters and researchers “have pared back reporting and publishing, particularly on any topics that could be perceived as relating to the Paxton investigation.”
“These reporters and researchers are also aware that Media Matters’s editorial team has been required to hold back stories about X and Musk due to these concerns,” the lawsuit says.
The lawsuit also noted that Media Matters is outside Paxton’s jurisdiction. It is based in Washington, and it says it does not transact business in Texas, as defined by the state’s business code.
“That Plaintiffs may be dragged to court in an unknown, unfamiliar, and untouched venue in Texas at the option of Attorney General Paxton further chills their speech,” the lawsuit says.
In a letter sent to Media Matters by Missouri’s Attorney General, Bailey writes:
“This letter serves as a formal document hold notice under federal and Missouri law. The Missouri Attorney General’s Office has opened an investigation into Media Matters for America (“Media Matters”) regarding your firm’s potentially unlawful business practices.
“As you are no doubt aware, a federal lawsuit has been filed against Media Matters, raising serious allegations that your firm falsely and deceptively manipulated the algorithm on X (formerly known as Twitter) through coordinated, inauthentic behavior and that you did so in an attempt to defame the organization and cause advertisers to pull their support from the platform, thus harming free speech. The lawsuit alleges that you lied to the public, falsely suggesting that fringe, extremist content regularly appears next to content from corporate advertisers when in fact the opposite is true. At the same time, you appear to have used this coordinated, inauthentic activity to solicit charitable donations from consumers across the country.”
He continued, “I have reason to believe that your firm’s alleged actions may have violated Missouri consumer protection laws, including laws that prohibit nonprofit entities from soliciting funds under false pretenses. E.g., Mo. Rev. Stat. § 407.020.1. I am especially concerned that Media Matters’ actions, if proven true, have hampered free speech by targeting an expressly pro free speech social media platform in an attempt to cause it financial harm while defrauding Missourians in the process.
“You are thus hereby instructed to preserve all records that may relate to your alleged effort to engage in coordinated, inauthentic behavior on social media platforms in order to generate false statements that were used to solicit charitable contributions under false pretenses. “
In an emailed request for comment regarding the Missouri Attorney General’s letter, a spokesperson for Media Matters told the Blade the non-profit had no comment at this time.
The lawsuit comes as Musk’s social media platform has taken serious advertising losses as companies, unhappy with the proliferation of unfettered extremist right-wing viewpoints and in the case of the LGBTQ+ community and religious minorities, hate speech and antisemitism/Islamophobia which has greatly escalated.
Chicago-based journalist Ashley Belanger, a senior policy reporter for Ars Technica, a publication covering AI, cryptocurrency, social media, the tech industry and the semiconductor industry reported:
According to internal X sales team documents reviewed by The New York Times, X may lose “up to $75 million” as more than 100 major brands—including Airbnb, Amazon, Coca-Cola, Google, Microsoft, Netflix, and Uber—have stopped advertising, while “dozens” more are considering pausing ads on the platform.
Bloomberg News reported:
Elon Musk’s X, the social network formerly known as Twitter, is on track to bring in roughly $2.5 billion in advertising revenue in 2023 — a significant slump from prior years, according to people familiar with the matter.
X generated a little more than $600 million in advertising revenue in each of the first three quarters of the year, and is anticipating a similar performance in the current period, according to a person familiar with the numbers. That compares to more than $1 billion per quarter in 2022.
The previously unreported sales figures underscore with greater clarity advertisers’ unease with how X is handling content moderation under Musk, and in particular the new owner’s posts that amplify antisemitic and other extremist views.
In its lawsuit against Media Matters, Musk’s attorneys agued that the Washington-based non-profit’s article profiling X was untrue, alleging the reporting did not reflect what typical users see.
“Media Matters knowingly and maliciously manufactured side-by-side images depicting advertisers’ posts on X Corp.’s social media platform beside Neo-Nazi and white-nationalist fringe content and then portrayed these manufactured images as if they were what typical X users experience on the platform,” the lawsuit said.
The suit claims that Media Matters had “intentionally interfered with contracts” between X and its advertisers. The lawsuit also alleges was the article disparaged X with false statements and that it did so “with clear malice, well aware of their falsity.” And additionally Media Matters had unlawfully interfered with business relationships intended to harm the company’s advertising sales.
Additional reporting from NBC News, Bloomberg and Ars Technica.
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