Elon Musk’s attempts to punish advertisers for halting their ad spend on X have all but ended, with the FTC settling its latest court case over Musk’s claims of a coordinated effort to silence the app, according to Deadline.
The FTC investigation came at the insistence of Musk, who claimed that influential ad advisory organizations, including Media Matters and GARM, were colluding to work against X as a form of political censorship over commentary they didn’t like.
Back in 2023, about a year after Musk acquired the app, Media Matters published various reports which, based on its research, showed that X had been placing ads from major brands alongside white nationalist and antisemitic content, among other concerns.
At the time, Musk himself was also amplifying concerning posts, and the broader discussion of such led many advertisers to cut or pause their X ad spend.
Musk claimed that these cuts were part of a coordinated, politically-motivated campaign designed to silence X and force the platform to align with the censorship demands of Media Matters and other ad groups.
Musk then launched legal action against several of these ad organizations. He also publicly named several brands that had paused their X ad spend, in an effort to pressure them to resume. Several months later, the FTC also issued a civil investigative demand of Media Matters in relation to the issue.
As reported by Deadline, Sparkle L. Sooknanan, a federal court judge, ruled last year that the FTC violated the First Amendment in issuing a civil investigative demand to the group. The FTC subsequently appealed Sooknanan’s decision, and the lawsuit was dismissed this week. Both sides gave a settlement notice.
The case echoes a similar lawsuit, which ended in March, which found in favor of the World Federation of Advertisers and GARM over the same claims.
This means Musk’s efforts to force brands to keep paying for X ads have been effectively ruled invalid, though that doesn’t necessarily mean Musk has ultimately lost out.
Musk’s public outcry over the advertiser boycott did bring some of the biggest brands back to the app, so that public pressure effort worked. The threat of being dragged into a class action lawsuit also scared several CEOs into resuming their X ad spend. On balance, despite judgment going against X in both cases, and the cost of Musk’s legal fees, the app has likely come out on top, in terms of ad spend versus legal spend.
In the end, then, the lawsuits showcase the fundamentals of “lawfare,” and using litigation as a weapon to win in business. In these scenarios, the richest party often wins, because they can afford to drag things through the courts and put pressure on their targets through mounting costs.
Indeed, as reported by CNBC, in August 2024, the WFA suspended the GARM program due to X’s legal action, and concerns that it would be too costly for the initiative to take on.
So who, then, is the winner here? Well, likely Elon Musk, who caused enough chaos and concern to ultimately drive more money back to his business.
