Texas AG Launches Fraud Probe Into Media Matters As Musk Files Lawsuit

• Media Matters was served a double whammy on Monday, after reporting on X’s advertising strategy.
• It said X placed ads next to pro-Nazi content — leading to an advertiser exodus from the platform.
• Elon Musk is now suing the watchdog, and Texas AG Ken Paxton is investigating the group for fraud.

Texas Attorney General Ken Paxton on Monday launched a fraud investigation into Media Matters for America, on the same day that Elon Musk filed a lawsuit against the non-profit.

Both actions, announced on Monday, form a double whammy for Media Matters that hinges on its report that Musk’s X was placing ads next to pro-Nazi content.

The report, published Thursday, triggered an advertiser exodus from X, after which Musk declared that he’d file a “thermonuclear” lawsuit against Media Matters.

Musk alleged that Media Matters manipulated its findings by deliberately following only a small selection of extremist accounts and big advertisers, then cherry-picking instances when posts from both categories were next to each other.

Now Paxton is jumping into the fray as well, with his office saying in a statement that he was “extremely troubled” by Musk’s allegations. His statement called Media Matters a “radical anti-free speech organization.”

“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 the statement.

On Musk’s part, the billionaire’s X Corp filed a lawsuit in Texas alleging that Media Matters launched a “blatant smear campaign” against the social media platform.

The lawsuit, seen by Business Insider, accuses Media Matters of “endlessly scrolling and refreshing its unrepresentative, hand-selected feed” to generate its report, which was released on Thursday.

The watchdog’s analysis had shown examples of ads from five companies — IBM, Oracle, Xfinity, Bravo, and Apple — next to antisemitic posts.

But X’s lawsuit alleges that no “authentic” users on X saw the combination of ads and pro-Nazi content that Media Matters found, with the exception of one other user who saw Apple’s ad.

The lawsuit calls for Media Matters to take down its report and asks for an undisclosed amount in damages.

In a statement to BI, Media Matters President Angelo Carusone said X’s lawsuit was “frivolous” and “meant to bully X’s critics into silence.”

“Media Matters stands behind its reporting and looks forward to winning in court,” Carusone said.

A Media Matters representative did not immediately respond when asked to comment on Paxton’s investigation.

It’s not the first time Paxton, a staunch conservative, has investigated a party that Musk also took issue with. In June 2022, the attorney general launched a probe into Twitter, now called X, over whether it falsified reports on bot accounts.

The announcement came as Musk had raised questions about bot accounts while in talks to buy Twitter for $44 billion.

Paxton’s office has not announced the outcome of the bot account investigation.

Meanwhile, Musk has been caught in a separate antisemitism controversy recently. On November 16, he retweeted an antisemitic post on Twitter, writing “you have said the actual truth,” and sparking backlash from other tech leaders and investors.