X owner Elon Musk followed through on his threat to file a lawsuit against progressive media-monitoring nonprofit Media Matters, which Musk believes is hurting business at his social-media platform.
The suit, filed on Monday in the U.S. District Court for the Northern District of Texas, Fort Worth Divison, alleges that Media Matters manufactured side-by-side images depicting advertisers’ posts on X “beside Neo-Nazi and white nationalist fringe content.”
X pointed Barron’s to a post from CEO Linda Yaccario when asked for comment. “If you know me, you know I’m committed to truth and fairness,” reads part of her tweet. “Not a single authentic user on X saw IBM’s,
Comcast’s
, or
Oracle’s
ads next to the content in Media Matters’ article.”
The complaint, which runs to 15 pages, explains how X believes Media Matters conducted its research to skew results. X believes that Media Matters’ study, published on Nov. 16 led advertisers including
International Business Machines
(ticker: IBM), Comcast’s (CMCSA) NBCUniversal, and
Apple
(AAPL) to suspend all advertising on the platform.
X is seeking damages, including the removal of the Nov. 16 article.
“This is a frivolous lawsuit meant to bully X’s critics into silence,” said Media Matters President Angelo Carusone in an emailed statement. “Media Matters stands behind its reporting and looks forward to winning in court.”
The article was published after Musk endorsed a claim, on Nov. 15, that Jewish communities are pushing hatred against white people in a series of posts on X, the platform formerly known as Twitter. His remarks drew condemnation from the Anti-Defamation League, the White House, and others.
Musk tweeted: “This past week, there were hundreds of bogus media stories claiming that I am anti-Semitic. Nothing could be further from the truth. I wish only the best for humanity and a prosperous and exciting future for all.” Separately on Saturday, he tweeted he would file a lawsuit on Monday.
“I thought [the complaint] was plausible,“ says Carl Tobias, Williams Chair in Law at the University of Richmond, meaning the harm claimed by X makes sense. He doesn’t see the suit getting thrown out of court immediately.
If the suit is allowed to proceed, there are depositions, discovery, and eventually a trial, he says. “I doubt Musk would ask for a jury trial, it seems to me it would be before the judge.”
The process could take up to six months, Tobias says. He also points out that the judge assigned to the case was appointed by President Trump, and that may have played a role in where the lawsuit was filed.
In addition to the suit, Texas Attorney General Ken Paxton announced Monday an investigation into Media Matters in connection with the X controversy.
Media Matters didn’t immediately respond to a request for comment about the investigation.
Tesla
(TSLA) investors have been following the X issue, wondering if negative publicity at X could hurt Tesla’s brand. Losses at X can matter for Tesla investors in another way, too.
A significant source of cash and liquidity for Musk is his holdings of Tesla stock. Musk sold billions of dollars of Tesla shares throughout 2022 to help fund his purchase of the social-media platform. From the time he tweeted “I made an offer” for Twitter on April 14 of that year until he said he was done selling stock that December, Tesla shares fell more than 60%.
Stocks in general were falling at the time: The
Nasdaq Composite
was off more than 20% over the same span. But selling large blocks of shares, as Musk did to fund the acquisition, pressures prices. And investors don’t want to add to positions if they know large stock sales are coming.
Through Tuesday trading, Tesla stock was down roughly $1.60, or almost 1% since Musk’s Nov. 15 tweet. The Nasdaq Composite was up less than 1% over the same span.
Write to Al Root at [email protected]
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