X sues Media Matters as advertisers flee in wake of damaging report

Nov. 21 (UPI) -- X filed a federal lawsuit on Monday against Media Matters, claiming the watchdog group's recent investigation, which revealed Nazi content juxtaposed with ads from major U.S. corporations, had damaged the platform's reputation.

Filed Sunday in the U.S. Fifth Circuit in Fort Worth, the defamation case seeks unspecified damages and calls for Media Matters to retract the report and take it down from the center's website.

The Media Matters report, published Nov. 16, noted several recent posts on X, formerly known as Twitter, that featured Holocaust denial, a quote attributed to Adolf Hitler alongside an image of the fascist leader, as well as a claim that the rise of Nazism was a "spiritual awakening."

X's lawsuit claims the investigative report sought to hurt ad sales by painting a false picture of the platform, and argues the Media Matters article didn't accurately reflect the content that is typically encountered by X users.

"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 suit alleges. "Media Matters designed both these images and its resulting media strategy to drive advertisers from the platform and destroy X Corp."

Eric Hananoki, a senior investigative reporter at Media Matters who wrote the piece, is also named as a defendant.

The lawsuit alleges Media Matters deliberately "interfered with contracts" between X and advertisers, made false and disparaging statements about X "with clear malice," and engaged in unlawful interference with business relationships.

Media Matters President Angelo Carusone vowed the nonprofit research center, which was launched in 2004 to scrutinize conservative media outlets to counter misinformation, is prepared to vigorously defend itself in the case.

"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, according to CNBC.

X faces a high legal bar in proving defamation in the case given the constitutional requirement to show that Media Matters had acted with actual malice in publishing its claims -- a standard rooted in the First Amendment protection of free speech.

X's legal action comes as Texas Attorney General Ken Paxton announced a separate investigation into alleged financial fraud inside Media Matters, while Missouri Attorney General Andrew Bailey said his office was also weighing whether to launch a probe.

"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 a news release that X owner Elon Musk shared to his account on Monday night, while noting "Fraud has both civil and criminal penalties."

In recent weeks, Musk's platform has also been accused of allowing hundreds of verified users to post false or unsubstantiated claims about the Israel-Hamas war.

Back in September, the Center for Countering Digital Hate accused X of violating its own moderation policies by allowing extreme content to remain up despite reports from users to remove them.

At the time, the digital watchdog -- which monitors hate speech, misinformation and other harmful online content -- issued a report saying X failed to address about 86% of incendiary posts that were flagged for promoting hate and extolling white supremacy, neo-Nazism, antisemitism, and racism.

Musk's company previously drew scrutiny from lawmakers after it sued the Center of Countering Digital Hate, alleging it engaged in "a scare campaign to drive away advertisers from the X platform" after it released an earlier report that found X failed to act on 99% of hateful content on the site.

Last Wednesday, Musk triggered public outrage by endorsing an anti-Semitic conspiracy theory, which also drew a resounding condemnation from the White House.

The next day, Media Matters published its report alleging that Nazi posts had run next to ads from Apple, Disney, IBM, and other corporate giants who responded by yanking their advertising dollars.

While Musk has acknowledged the presence of Nazi propaganda on the platform, he continues to defend such incendiary posts as expressions of free speech.

The billionaire executive posted a statement to X last Friday, arguing that out of the nine posts flagged by Media Matters, only one had actually violated content policies, and that the platform took immediate action to restrict its visibility.