Elon Musk's X Corp. is pursuing legal action against Media Matters, claiming that the nonprofit's report caused a significant drop in advertising revenue. The lawsuit accuses Media Matters of creating false images that showed companies' ads being displayed alongside hateful content on the X platform, allegedly leading to advertisers pausing their campaigns.

X Corp. asserts that users didn't actually see the controversial ad pairings that Media Matters reported on, pointing to their internal data as evidence. Despite these claims, Media Matters remains confident in their reporting and is prepared to defend their actions in the ensuing court battle.

Furthermore, the Texas Attorney General has opened an investigation into Media Matters for potentially fraudulent activities, which adds another layer to the ongoing dispute related to the platform's content moderation and hate speech policies. This incident amplifies discussions regarding X's capacity to manage community standards and enforce rules against misinformation and hate speech.

Elon Musk's acquisition of the social media platform has been fraught with controversy, especially concerning increased hate speech and the reactivation of banned accounts. The conflict with Media Matters is one of several Musk has engaged with as he navigates the platform's role in moderating content and retaining advertisers.