Judge halts FTC inquiry tied to X advertising backlash

A federal judge has paused the Federal Trade Commission’s inquiry into Media Matters, issuing a temporary order that prevents the agency from proceeding while the case unfolds.

In 2023, the left-leaning watchdog reported that ads from major brands were appearing beside antisemitic and other objectionable posts on X, Elon Musk’s social network. Many big advertisers then froze their spending on the platform. X, in turn, sued Media Matters. The company also brought cases against several advertisers and industry groups, alleging a “systematic illegal boycott.”

After Donald Trump returned to the White House in January, the FTC launched a review into whether Media Matters unlawfully coordinated with advertisers. The agency requested records tied to the group’s reporting and its outreach to brands.

According to a TechCrunch report, U.S. District Judge Sparkle L. Sooknanan sided with Media Matters on Friday and put the FTC’s effort on hold, concluding the organization is likely to prevail on First Amendment claims.

Sooknanan, a Biden appointee to the U.S. District Court for the District of Columbia, wrote that the Media Matters article was “quintessential First Amendment activity” and called the FTC’s “expansive” demands “a retaliatory act.”

In her ruling, she added “It should alarm all Americans when the Government retaliates against individuals or organizations for engaging in constitutionally protected public debate. And that alarm should ring even louder when the Government retaliates against those engaged in newsgathering and reporting.”

She also referenced remarks by Andrew Ferguson from before he became the FTC’s chair, noting his appearance on Steve Bannon’s podcast urging scrutiny of progressive groups that critique online disinformation, and that once in the role he “brought on several senior staffers at the FTC who previously made public comments about Media Matters.”

Media Matters layoffs and WFA pulls back amid X litigation

Regardless of how the litigation proceeds, X’s courtroom strategy has already altered the environment for the entities it targeted. Media Matters has cut staff; one displaced researcher is now running for Congress. The World Federation of Advertisers shut down a brand-safety initiative and reportedly warned members about financial strain.

On Thursday, the WFA told members it was “discontinuing” activities for its Global Alliance for Responsible Media after X filed an antitrust case against the group earlier in the week. In an email seen by Business Insider, WFA CEO Stephan Loerke said the move was “not made lightly,” noting that GARM is a nonprofit with limited resources. He said the WFA and GARM will fight X’s allegations in court and are confident the case will “demonstrate our full adherence to competition rules in all our activities.”

That note came two days after X filed suit in a Texas court, alleging that GARM participants worked together to “collectively withhold billions of dollars in advertising revenue” from Twitter, now called X. The complaint also identifies several GARM participants, including Unilever, Mars, CVS, and Ørsted.

Sooknanan further wrote that the FTC’s inquiry produced its “intended effect,” saying Media Matters chose “against pursuing certain stories about the FTC, Chairman Ferguson, and Mr. Musk.”