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FTC Probes Media Matters Over Alleged Role in X Advertiser Boycott

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The U.S. Federal Trade Commission (FTC) has opened an investigation into Media Matters, demanding documents about potential coordination with other watchdog groups accused by Elon Musk of organizing advertiser boycotts targeting X, the social media platform formerly known as Twitter.

According to a document reviewed by Reuters, the FTC issued a civil investigative demand (CID) requesting details about Media Matters’ communications with groups like the Global Alliance for Responsible Media (GARM)—a now-disbanded initiative under the World Federation of Advertisers. Both organizations are also being sued by Musk’s company for allegedly coordinating an illegal boycott of X.

The investigation is focused on whether Media Matters and other entities colluded to pressure advertisers into pulling ad spending from X, which Musk acquired in 2022.

Escalation Under Trump-Era FTC Chair

The probe reflects a shift in priorities under FTC Chairman Andrew Ferguson, appointed by President Donald Trump. In December, Ferguson stated:

“We must prosecute any unlawful collusion between online platforms, and confront advertiser boycotts which threaten competition among those platforms.”

The FTC has not made any formal accusations, and a CID is not an indication of wrongdoing. However, the demand signals that federal regulators are scrutinizing possible anticompetitive conduct in the ad industry amid rising political and legal tensions between progressive media groups and Musk-led platforms.

Media Matters Responds

Angelo Carusone, President of Media Matters, condemned the probe:

“The Trump administration has been defined by naming right-wing media figures to key posts and abusing the power of the federal government to bully political opponents and silence critics.”

“These threats won’t work; we remain steadfast to our mission.”

Media Matters is engaged in two legal battles with X—defending itself from a 2023 defamation lawsuit and pursuing its own case accusing X of retaliatory litigation tactics.

Background and Broader Legal Context

  • X sued Media Matters in 2023 for publishing reports that showed major brand ads appearing next to extremist content on the platform.

  • Media Matters countersued, alleging that Musk’s company was trying to silence critical reporting with costly, meritless lawsuits.

  • X also sued the World Federation of Advertisers and major brands in Texas federal court, alleging unlawful conspiracy to limit advertising.

  • The U.S. House Judiciary Committee, chaired by Rep. Jim Jordan, has previously accused GARM of coordinating an illegal group boycott. The initiative was shut down in August 2023.

Market Context

While X has struggled with declining ad revenue since Musk’s takeover, research by Emarketer suggests ad spending could increase in 2025, although it still remains below pre-acquisition levels.

Elon Musk, a major Trump campaign donor, has been publicly vocal about alleged efforts to suppress conservative voices and crypto innovation, while also pushing a broader federal workforce reduction initiative.

Elon Musk’s X Now Valued 80% Less Than Purchase Price, According to Fidelity

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The social media platform formerly known as Twitter, now X, has seen its value plunge nearly 80% since Elon Musk acquired it in October 2022. This staggering drop in valuation comes from estimates provided by Fidelity, a major investment firm that owns shares in X through its Blue Chip Growth Fund.

When Musk took Twitter private for $44 billion, it was a highly publicized acquisition. However, as of August 2024, Fidelity estimates that its shares in X are worth only $4.2 million, suggesting that the overall valuation of the company now stands at $9.4 billion—a far cry from the original purchase price. This represents a 24% drop from Fidelity’s own estimate in July and a 79% decline from its original valuation at the time of Musk’s purchase.

Declining Ad Revenue and Brand Safety Concerns

Fidelity’s assessment aligns with analysts’ concerns over X’s shrinking ad revenue, an issue compounded by the platform’s failure to publicly release financial metrics. Advertising has been a significant pain point for X since Musk’s acquisition, particularly with advertisers expressing discomfort over extreme content appearing on the platform. A Kantar global survey recently revealed that 26% of marketers plan to reduce ad spending on X in the coming year, with concerns over brand safety. Only 4% of advertisers believed their ads were safe from appearing near problematic content on X, compared to 39% on Google.

Musk’s public behavior has also contributed to advertiser unease. In November, he faced backlash after endorsing an antisemitic conspiracy theory. While he later apologized, he infamously told advertisers who were halting spending on X: “Go f**k yourself.”

Despite these setbacks, X remains a key player in social media with 570 million monthly active users in the second quarter of 2024, reflecting a 6% growth year-over-year. However, Similarweb data indicated declining engagement, particularly in the U.S., where X’s monthly active users on iOS and Android dropped 11% from the previous year and 20% since Musk’s acquisition.

Fidelity’s Estimate vs. Other Projections

While Fidelity’s valuation implies significant losses, not all experts agree with the extent of the decline. Gene Munster, managing partner at Deepwater Asset Management, argues that Fidelity is “overly aggressive” in its devaluation, believing the firm is simply cleaning house on its investment. Munster sees a longer-term potential in X’s vast data, particularly as a critical source of training material for Grok, an AI chatbot developed by xAI, Musk’s AI startup.

Dan Ives, an analyst at Wedbush Securities, suggested that Musk may have initially overpaid for Twitter, estimating its worth closer to $30 billion at the time of purchase and $15 billion today. However, Munster maintains optimism, noting that X’s value lies in the unique real-time data it provides, which is becoming increasingly valuable in the AI landscape. He added that Musk’s acquisition of Twitter might be a case of being “better lucky than smart,” given the rapid developments in AI.

Elon Musk’s X Sues Ad Industry Group Over Alleged Advertising ‘Boycott’

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Elon Musk’s X has filed a lawsuit against the Global Alliance for Responsible Media (GARM) and four prominent companies — CVS, Unilever, Mars, and Ørsted — alleging antitrust violations and accusing the group of orchestrating an advertising “boycott” against the platform. The lawsuit claims that GARM, an ad-industry initiative run by the World Federation of Advertisers, conspired to collectively withhold billions of dollars in advertising from Twitter, now rebranded as X, due to concerns over brand safety standards post-Musk’s acquisition in late 2022.

GARM aims to help brands avoid placing advertisements alongside illegal or harmful content. It comprises over 100 member companies who agree to adhere to GARM’s brand safety standards. The lawsuit alleges that after GARM publicly urged X to comply with these standards, many affiliated companies abruptly reduced or halted their advertising on the platform. This action, according to X, has significantly harmed its core ad business, which has struggled since Musk’s takeover due to fears of ads running alongside misinformation or hate speech.

X’s CEO, Linda Yaccarino, highlighted the dire situation in a video, stating that the alleged boycott threatens the company’s long-term viability. The lawsuit seeks to prevent GARM from continuing to make recommendations about advertising on X and requests unspecified monetary damages.

This lawsuit is part of a broader pattern of legal actions by X to address its declining ad revenue. Previously, X sued the Center for Countering Digital Hate (CCDH) and Media Matters, both watchdog groups, accusing them of distorting information about hate speech and extremist content on the platform, which they claim drove advertisers away. A federal judge dismissed the suit against CCDH, and the case against Media Matters is set for trial next year.