FTC Close to Settlements in Ad Boycott Probe, Lawyer Says (1)

The US Federal Trade Commission is negotiating antitrust settlements with the targets of its investigation into alleged advertiser boycotts of online platforms, including Elon Musk’s X, an agency lawyer told a federal appeals court Monday.

“We are actually in settlement negotiations with targets of this investigation and we anticipate public announcements on that front soon,” FTC lawyer Thomas Byron told the US Court of Appeals for the DC Circuit. “We’ll inform the court, of course, as soon as the commission takes action.”

The agency has been investigating whether more than a dozen media and advertising groups illegally colluded to boycott online content alleged to be hateful, false or misleading, Bloomberg News has reported. The probe partially relates to litigation between X and the liberal watchdog group Media Matters for America, but also involves trade groups including Interactive Advertising Bureau and World Federation of Advertisers and the news rating company Ad Fontes Media Inc.

Byron appeared before a three-judge DC Circuit panel to argue that a civil investigative demand against Media Matters should be reinstated. A lower court last year issued an injunction blocking the FTC’s information demand as illegal retaliation against Media Matters for exercising its constitutional right to free speech. The FTC is appealing.

Read More: Media Groups Probed by FTC Over Coordinating Boycott Claims

The Wall Street Journal reported the settlement talks earlier.

During the 90-minute hearing, Byron argued the lower court erred in granting the injunction. The group can’t show First Amendment retaliation was the only reason the FTC sought information from Media Matters, he said.

“This is not retaliatory action,” the FTC lawyer said. “This is a serious investigation into collusive conduct.”

Some of the harms to Media Matters are largely self-inflicted since the FTC’s information demand is confidential, and only became public when the group challenged it, Byron said. Media Matters could have chosen not to respond to the FTC’s CID, because the agency can’t enforce its demand without seeking a court order, he said.

DC Circuit Judge Patricia Millet pushed back on that idea.

“We’re supposed to find that this is self-inflicted because no one would have known about the CID if they had done nothing?” she said. That argument “would license the government to engage in rampant constitutional violations of speech. It would, because no one can ever take it to court.”

Nazi-Related Content

Media Matters alleged that it was subject to retaliation over a November 2023 article that said Musk’s social media platform X allowed advertising to appear alongside antisemitic and Nazi-related content. That report led some companies to pull their advertising off X, and Musk sued the group. That lawsuit remains going in Texas federal court and is set for trial later this year.

Millet highlighted statements by FTC Chairman Andrew Ferguson that he planned to “go after the radical left and use advertiser boycotts to do so.”

“Judge Millet, this is not about being anti-Nazi,” Byron said. “The antitrust theory here is that by colluding among advertisers, that reduces advertising on certain platforms in violation of the antitrust laws. That is a legitimate subject, a serious concern of antitrust enforcement.”

But Byron acknowledged that the FTC contends Media Matters may have information relevant to the investigation because of litigation filed by Musk.

Media Matters’ attorney Nathaniel Zelinsky argued that the FTC’s acknowledgment that the information it needs from the group relates to the Musk lawsuit should “doom” the appeal.

“The only argument they’ve given in this court is to say, ‘Well you know that Elon Musk’s campaign of retaliation is why,’” he said. “That should raise deep concerns and disproves the argument that they somehow would have gone after Media Matters for another reason.”

(Updates with arguments in court Monday, background on litigation.)

To contact the reporter on this story:
Leah Nylen in Washington at lnylen2@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Steve Stroth, Elizabeth Wasserman

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