X, formerly Twitter, is now letting blocked users see posts made by the people who blocked them.
“We’re starting to launch the block function update,” X’s engineering team wrote yesterday. X previously said that after the change, “If your posts are set to public, accounts you have blocked will be able to view them, but they will not be able to engage (like, reply, repost, etc.).”
To justify the change, X said the block functionality could previously be “used by users to share and hide harmful or private information about those they’ve blocked.” The change will allow people who are blocked “to see if such behavior occurs… allowing for greater transparency,” X said.
X owner Elon Musk argued last year that “blocking public posts makes no sense. It needs to be deprecated in favor of a stronger form of mute.”
There were many angry responses to the change, both yesterday and previously, when X said it would be coming soon. While some users may only use blocking to avoid seeing accounts that are annoying, some X users said the policy could be harmful for people who use blocking as a safety measure.
The new policy could help stalkers and other bad actors, some said. Blocked accounts could view, screenshot, and share content posted by the person who blocked them, some people pointed out. The block button is now “a glorified mute button,” one user said.
Blocked users can view and search for posts
Before the change, X’s support page on blocking accounts said blocked accounts cannot “view your posts when logged in on X (unless they report you, and your posts mention them,” “find your posts in search when logged in on X,” or “view a Moment you’ve created when logged in on X.”
“It is common for companies to include venue clauses in their terms of service directing what forum would hear any disputes filed against them. But the choice of the Northern District of Texas stands out because X is not even located in the district,” the Reuters article said.
X has filed multiple lawsuits in the Northern District of Texas. The case against Media Matters for America is being heard by US District Judge Reed O’Connor, who bought Tesla stock valued at between $15,001 and $50,000 in 2022. X sued Media Matters over its research on ads being placed next to pro-Nazi content on X.
O’Connor refused to recuse himself from the X case, despite Media Matters arguing that “ownership of Tesla stock would be disqualifying” for a judge because “an investment in Tesla is, in large part, a bet on Musk’s reputation and management choices.” O’Connor, a George W. Bush appointee, later rejected Media Matters’ argument that his court lacked jurisdiction over the dispute.
New financial disclosures show that O’Connor still owned Tesla stock as of early 2024, NPR reported on Wednesday. Filings show “that O’Connor bought and sold Tesla stock [in 2023], with his position in Tesla still totaling up to $50,000,” and that he “has not bought or sold Tesla stock in the first few months of 2024,” NPR wrote.
Professor questions ethics of forum clause
O’Connor was also initially assigned to Musk’s lawsuit alleging that advertisers targeted X with an illegal boycott. But O’Connor recused himself from the advertiser case because he invested in Unilever, one of the defendants. X has since reached an agreement with Unilever and removed the company from the list of defendants.
X’s new terms don’t guarantee that cases will end up before O’Connor. “The only place in the Northern District where you’re guaranteed to draw O’Connor is Wichita Falls. Elsewhere in the district, you could draw other judges,” Georgetown Law Professor Steve Vladeck wrote.
For any of the federal districts in Texas, appeals would go to the conservative-leaning US Court of Appeals for the 5th Circuit.
“After Breton resigned in September, he bequeathed his fining powers to competition and digital boss Margrethe Vestager. Decisions on the penalties and how they are calculated would ultimately lie with Vestager,” Bloomberg wrote. The European Commission would have the final say.
“The commission hasn’t yet decided whether to penalize X, and the size of any potential fine is still under discussion,” Bloomberg wrote, citing its anonymous sources. “Penalties may be avoided if X finds ways to satisfy the watchdog’s concerns.”
X says SpaceX revenue should be off-limits
Although X faces potential DSA fines, it will avoid penalties under the EU’s Digital Markets Act (DMA). The European Commission announced yesterday that X does not “qualify as a gatekeeper in relation to its online social networking service, given that the investigation revealed that X is not an important gateway for business users to reach end users.”
But documents related to the DMA probe of X raise the possibility of treating multiple Musk-led companies as a single entity called the “Musk Group” for compliance purposes. In a March 2024 letter to Musk and X Holdings Corp., “the Commission set out its preliminary views on the possible designation of Mr. Elon Musk and the companies that he controls (‘the Musk Group’) as a gatekeeper,” according to a document signed by Breton.
X has argued that it wouldn’t make sense to include Musk’s other companies in revenue calculations when issuing penalties. “X Holdings Corp. submits that the combined market value of the Musk Group does not accurately reflect X’s monetization potential in the Union or its financial capacity,” the document said. “In particular, it argues that X and SpaceX provide entirely different services to entirely different users, so that there is no gateway effect, and that the undertakings controlled by Mr. Elon Musk ‘do not form one financial front, as the DMA presumes.'”
We contacted X and SpaceX today and will update this article if they provide any comment.
A federal judge who bought more than $15,000 worth of Tesla stock has rejected a motion that could have forced him to recuse himself from a lawsuit that Elon Musk’s X Corp. filed against the nonprofit Media Matters for America.
US District Judge Reed O’Connor of the Northern District of Texas bought Tesla stock valued between $15,001 and $50,000 in 2022, a financial disclosure report shows. He was overseeing two lawsuits filed by X and recused himself from only one of the cases.
Media Matters argued in a July court filing that Tesla should be disclosed by X as an “interested party” in the case because of the public association between Musk and the Tesla brand. O’Connor rejected the Media Matters motion in a ruling issued Friday.
O’Connor wrote that financial interest “means ownership of a legal or equitable interest, however small, or a relationship as director, adviser, or other active participant in the affairs of a party.” His ruling said the standard is not met in this case and accused Media Matters of gamesmanship:
Defendants failed to show facts that X’s alleged connection to Tesla meets this standard. Instead, it appears Defendants seek to force a backdoor recusal through their Motion to Compel. Gamesmanship of this sort is inappropriate and contrary to the rules of the Northern District of Texas.
Judge should exit case, law professor writes
O’Connor made the ruling three days after recusing himself from a similar lawsuit filed by X. In that case, X sued the World Federation of Advertisers (WFA) and several large corporations that it accuses of an illegal boycott. Antitrust law professors have described X’s claims as weak.
O’Connor didn’t explain why he recused himself, but it seems clear that it wasn’t because of his Tesla stock. O’Connor also invested in Unilever, one of the defendants in X’s advertising lawsuit. Since Unilever is directly involved in the case, that’s likely what drove O’Connor’s recusal decision.
Musk’s case against Media Matters is also related to X’s problem with advertisers fleeing the platform formerly named Twitter. Media Matters published research on ads being placed next to pro-Nazi content on X, and the lawsuit blames the group for X’s advertising losses.
The federal code of judges’ conduct says that “a judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned.” This includes cases in which the judge has a direct financial interest, and cases where the judge has “any other interest that could be affected substantially by the outcome of the proceeding.”
Harvard Law School Professor Noah Feldman argued that O’Connor should recuse himself from X v. Media Matters. While X and Tesla are legally separate entities, Feldman wrote in a Bloomberg Opinion piece last week that O’Connor should exit because of that “impartiality might reasonably be questioned” rule.
“The basic idea is that a judge should recuse himself if a reasonable person in possession of the relevant facts would believe that the judge has reason for bias. And there is good reason to think that this rule covers O’Connor,” Feldman wrote. “Because Musk is so closely identified with both X and Tesla, Tesla share prices are arguably affected by the performance of X.”
Antitrust law professors aren’t impressed by Elon Musk’s lawsuit alleging a supposed X advertising boycott amounts to an antitrust violation. Based on the initial complaint filed by Musk’s X Corp., it looks like “a very weak case,” Vanderbilt Law School Associate Dean for Research Rebecca Haw Allensworth told Ars.
“Given how difficult this will be to win, I would call it an unusual strategy,” she said.
The lawsuit against the World Federation of Advertisers (WFA) and several large corporations says that the alleged boycott is “a naked restraint of trade without countervailing benefits to competition or consumers.” The “collective action among competing advertisers to dictate brand safety standards to be applied by social media platforms shortcuts the competitive process and allows the collective views of a group of advertisers with market power to override the interests of consumers,” X claims.
Musk already won a victory of sorts as the WFA yesterday shut down the Global Alliance for Responsible Media (GARM) initiative that is the main subject of X’s allegations. “GARM is a small, not-for-profit initiative, and recent allegations that unfortunately misconstrue its purpose and activities have caused a distraction and significantly drained its resources and finances. GARM therefore is making the difficult decision to discontinue its activities,” the WFA said.
But the GARM shutdown won’t result in Musk’s company obtaining any financial damages unless X also wins in court. The company formerly named Twitter sued in a federal court in Texas, part of the conservative 5th Circuit, a venue that Musk likely believes will be more favorable to him than a court in another state. The District Court judge overseeing the lawsuit is also handling Musk’s case against Media Matters for America, a nonprofit that conducted research on ads being placed next to pro-Nazi content on X.
Texas is one of three states, along with Louisiana and Mississippi, where appeals go to the US Court of Appeals for the 5th Circuit. “The 5th Circuit is well known as the most conservative circuit in the country,” Professor Stephen Calkins of Wayne State University Law School told Ars.
“The law here is very unfavorable to X”
Despite the potentially friendly Texas court venue, Musk’s X faces a high legal bar in proving that it was the victim of an illegal boycott.
Allensworth said X must show “that the defendants did actually enter into an agreement—that they had a deal with each other to pull advertising spend from X as a group, not that each brand did it individually to protect their own brand status or make their own statement about Elon Musk. The law here is very unfavorable to X, but the complaint describes a lot of conduct that could support a jury or judge finding an agreement. But it’s a fact question, and we only have half the story.”
A bigger problem for Musk “is that X must show that the boycott harmed competition, not just that it harmed X,” Allensworth said. “The complaint is far from clear on what competition was harmed. A typical boycott will harm competition among the boycotters, but that doesn’t seem to be what the complaint is about. The complaint says the competition that was harmed was between platforms (like X/Twitter and Facebook, for example) but that’s a bit garbled. Again, we may know more as the suit develops.”
There’s one more problem that may be even bigger than the first two, according to Allensworth. Even if X proves there was an explicit agreement to pull advertising and that a boycott harmed competition, the advertisers would have a strong defense under the First Amendment’s right to speech.
“Concerted refusals to deal (boycotts) are not vulnerable to antitrust suit if they are undertaken to make a statement—essentially to engage in speech,” Allensworth explained. “It would seem here like that was the purpose of this boycott (akin to lunch counter boycotts in the ’60s, which were beyond the reach of the antitrust laws). Given that the Supreme Court has only increased First Amendment rights for corporations recently, I think this defense is very strong.”
All of those factors “add up, to me, to a very weak case,” Allensworth told Ars. But she cautions that at this early stage of litigation, “there’s a lot we don’t know; no one can judge a case based on the complaint alone—that’s the point of the adversarial system.”
An X court win wouldn’t force companies to advertise on the platform. But “if somehow they prevail, X could ask for treble damages—three times the revenue they lost because of the boycott,” Allensworth said.
A watchdog group’s investigation found that terrorist group Hezbollah and other US-sanctioned entities have accounts with paid checkmarks on X, the Elon Musk-owned social network that still resides at the twitter.com domain.
The Tech Transparency Project (TTP), a nonprofit that is critical of Big Tech companies, said in a report today that “X, the platform formerly known as Twitter, is providing premium, paid services to accounts for two leaders of a US-designated terrorist group and several other organizations sanctioned by the US government.”
After buying Twitter for $44 billion, Musk started charging users for checkmarks that were previously intended to verify that an account was notable and authentic. “Along with the checkmarks, which are intended to confer legitimacy, X promises various perks for premium accounts, including the ability to post longer text and videos and greater visibility for some posts,” the Tech Transparency Project report noted.
The Tech Transparency Project suggests that X may be violating US sanctions. “The accounts identified by TTP include two that apparently belong to the top leaders of Lebanon-based Hezbollah and others belonging to Iranian and Russian state-run media,” the report said. “The fact that X requires users to pay a monthly or annual fee for premium service suggests that X is engaging in financial transactions with these accounts, a potential violation of US sanctions.”
Some of the accounts were verified before Musk bought Twitter, but verification was a free service at the time. Musk’s decision to charge for checkmarks means that X is “providing a premium, paid service to sanctioned entities,” which may raise “new legal issues,” the Tech Transparency Project said.
Report details 28 checkmarked accounts
Musk’s X charges $1,000 a month for a Verified Organizations subscription and last month added a basic tier for $200 a month. For individuals, the X Premium tiers that come with checkmarks cost $8 or $16 a month.
It’s possible for US companies to receive a license from the government to engage in certain transactions with sanctioned entities, but it doesn’t seem likely that X has such a license. X’s rules explicitly prohibit users from purchasing X Premium “if you are a person with whom X is not permitted to have dealings under US and any other applicable economic sanctions and trade compliance law.”
In all, the Tech Transparency Project said it found 28 “verified” accounts tied to sanctioned individuals or entities. These include individuals and groups listed by the US Treasury Department’s Office of Foreign Assets Control (OFAC) as “Specially Designated Nationals.”
“Of the 28 X accounts identified by TTP, 18 show they got verified after April 1, 2023, when X began requiring accounts to subscribe to paid plans to get a checkmark. The other 10 were legacy verified accounts, which are required to pay for a subscription to retain their checkmarks,” the group wrote, adding that it “found advertising in the replies to posts in 19 of the 28 accounts.”
We contacted X today and will update this article if we get a comment. Our email to [email protected] triggered the standard auto-reply from [email protected] that says, “Busy now, please check back later.”
Update at 4: 28pm ET: After this article was published, X issued the following statement: “X has a robust and secure approach in place for our monetization features, adhering to legal obligations, along with independent screening by our payments providers. Several of the accounts listed in the Tech Transparency Report are not directly named on sanction lists, while some others may have visible account check marks without receiving any services that would be subject to sanctions. Our teams have reviewed the report and will take action if necessary. We’re always committed to ensuring that we maintain a safe, secure and compliant platform.”
Fidelity’s latest valuation of its stake in X implies that Elon Musk’s social network is worth about 71.5 percent less than when Musk bought the company in October 2022.
Fidelity’s Blue Chip Growth Fund has a relatively small stake in X. A monthly update for the fund listed the value of its “X Holdings Corp.” stake at $5.6 million as of November 30, 2023. The fund’s share of X was originally worth $19.7 million but lost about two-thirds of its value by April 2023 and has dropped more modestly since then.
Fidelity cut its valuation of X by 10.7 percent in November, according to Axios. One question is whether Fidelity sold any of its stake during November, but the latest drop in value isn’t surprising given the recent Musk-related controversies that drove advertisers away from the platform.
“As of Oct. 30 the fund hadn’t sold any of its stake, but the monthly report with the updated valuation doesn’t disclose whether the size of the holding changed,” Bloomberg wrote. “Assuming the fund hasn’t reduced its holding in X, the latest report implies the value of the entire company has also fallen by 72 percent. Fidelity declined to comment.”
X’s ad woes hurt value
Based on the $44 billion that Musk paid for Twitter over a year ago, the drop in Fidelity’s valuation would make the company worth about $12.5 billion. X reportedly valued itself at about $19 billion in October, based on the value of stock grants to employees.
Since Musk took Twitter private, the company’s value and revenue are harder to determine from the outside. As Axios noted, “Fidelity doesn’t necessarily have much, if any, inside information on X’s financial performance, despite being a shareholder in the privately held business. Other shareholders may value their X stock differently.”
X’s finances were shaky enough at the end of October, the one-year anniversary of Musk’s purchase. Musk made things worse in mid-November when he posted a favorable response to an antisemitic tweet. He addressed the antisemitism controversy in a public interview on November 29, telling businesses that pulled advertising from X to “go fuck yourself.”
X has had trouble retaining advertisers throughout Musk’s tenure, due largely to his approach to content moderation. Musk eliminated most of the company’s staff shortly after becoming its owner.
X loses bid to block California law
X is dealing with new regulations on content moderation, both in Europe and the US. Musk’s company sued California in September in an attempt to block the state’s content-moderation law but last week lost a key ruling in the court case.
On Thursday, US District Judge William Shubb denied X’s motion for a preliminary injunction that would have blocked enforcement of the California content-moderation law. The state law requires companies to file two reports each year with terms of service and detailed descriptions of content-moderation practices.
Shubb rejected X’s claim that the law violates the First Amendment. “While the reporting requirement does appear to place a substantial compliance burden on social medial companies, it does not appear that the requirement is unjustified or unduly burdensome within the context of First Amendment law,” Shubb wrote.
The judge agreed with California that there is “a substantial government interest in requiring social media companies to be transparent about their content moderation policies and practices so that consumers can make informed decisions about where they consume and disseminate news and information.”
Enlarge/ Elon Musk speaks at the Atreju political convention organized by Fratelli d’Italia (Brothers of Italy) on December 15, 2023 in Rome, Italy.
Getty Images | Antonio Masiello
Elon Musk’s ownership of Twitter, now called X, began with a lawsuit. When Musk tried to break a $44 billion merger agreement, Twitter filed a lawsuit that gave Musk no choice but to complete the deal.
In the year-plus since Musk bought the company, he’s been the defendant and plaintiff in many more lawsuits involving Twitter and X Corp. As 2023 comes to a close, this article rounds up a selection of notable lawsuits involving the Musk-led social network and provides updates on the status of the cases.
Musk sues Twitter law firm
Musk seemingly held a grudge against the law firm that helped Twitter force Musk to complete the merger. In July, X Corp. sued Wachtell, Lipton, Rosen & Katz in an attempt to claw back the $90 million that Twitter paid the firm before Musk completed the acquisition.
Most of that money was paid to Wachtell hours before the merger closed. X’s lawsuit in San Francisco County Superior Court claimed that “Wachtell arranged to effectively line its pockets with funds from the company cash register while the keys were being handed over to the Musk Parties.”
Wachtell sought to move the dispute into arbitration, pointing out that the contract between itself and Twitter contained a binding arbitration clause. In October, the court granted Wachtell’s motion to compel arbitration and stayed the lawsuit pending the outcome.
Unpaid-bill lawsuits
While Twitter paid the Wachtell legal bill before Musk could block the payment, dozens of lawsuits allege that X has refused to pay bills owed to other companies that started providing services to Twitter before the Musk takeover.
The suits were filed by software vendors, landlords, event planning firms, a private jet company, an office renovator, consultants, and other companies. The lawsuits helped some companies obtain payment via settlements, but X has continued to fight many of the allegations. We covered the unpaid-bill lawsuits in-depth in this lengthy article published in September.
Musk sues Media Matters
Musk has repeatedly blamed outside parties for X’s financial problems, which are largely due to advertisers not wanting to be associated with offensive and controversial content that used to be more heavily moderated before Musk slashed the company’s staff.
One of the biggest ad-spending drops came after a November 16 Media Matters report that said corporate ads were placed “next to content that touts Adolf Hitler and his Nazi Party.” Musk’s X Corp responded by suing Media Matters a few days later, claiming the group “manipulated the algorithms governing the user experience on X to bypass safeguards and create images of X’s largest advertisers’ paid posts adjacent to racist, incendiary content.”
The suit was filed in US District Court for the Northern District of Texas. There aren’t any significant updates on the case to report yet.
X Corp. previously filed a similar lawsuit against the nonprofit Center for Countering Digital Hate (CCDH), claiming the group “improperly gain[ed] access” to data, and “cherry-pick[ed] from the hundreds of millions of posts made each day on X” in order to “falsely claim it had statistical support showing the platform is overwhelmed with harmful content.”
The CCDC filed a motion to dismiss X’s lawsuit on November 16, saying that its actions constituted “newsgathering activity in furtherance of the CCDH defendants’ protected speech and reporting.” The motion and case are still pending in US District Court for the Northern District of California.
Musk suit against data scrapers tossed
In July, X Corp. sued unidentified data scrapers in Dallas County District Court, accusing them of “severely tax[ing]” company servers by “flooding Twitter’s sign-up page with automated requests.” The lawsuit was filed days after Twitter imposed rate limits capping the number of tweets users could view each day.
“Several entities tried to scrape every tweet ever made in a short period of time. That is why we had to put rate limits in place,” Musk wrote at the time.
The lawsuit initially listed four John Doe defendants and was amended to raise the number of defendants to 11. This was a tough lawsuit for X to pursue because it didn’t know who the scrapers were and identified them only by their IP addresses.
X issued subpoenas to Amazon Web Services, Akamai, and Google in attempts to gain information on the John Does behind the IP addresses, but the case fizzled out. On October 30, a Dallas County judge dismissed the lawsuit “for want of prosecution” and ordered X to pay the court costs.
