In legal fight, X blames nonprofit for millions in lost ad revenue

SAN FRANCISCO (CN) — At a motion to dismiss hearing on Thursday morning, a lawyer representing X (formerly Twitter) accused a nonprofit group that monitors online hate speech of causing the company to lose potentially tens of millions of dollars in ad revenue.

X originally sued the Center for Countering Digital Hate in July 2023, accusing the group of trying to draw advertisers away from X by showcasing harmful content hosted on X.

In its complaint, X said the D.C.-based CCDH violated X’s terms of service when it used a data scraping tool to cull tweets for harmful content and then published reports on them. X called it a “scare campaign" and claimed that CCDH was an activist agency masquerading as a research agency. It argued the group was funded and supported by unknown individuals and foreign governments.

In its reply to the suit in November, CCDH called the accusations “baseless'” and urged the court to throw out the suit. CCDH claims that X is trying to stifle free expression.

Elon Musk purchased Twitter in 2022 before rebranding it to X soon afterwards. Musk, who changed the content policies of the platform after purchasing, has faced criticism for the proliferation of hate speech and controversial content on the platform.

In the motion to dismiss hearing, Jonathan Hawk, counsel for X, told U.S. Senior District Judge Charles Breyer that the case was about security as well as the loss of ad revenue.

“The terms of service expressly prohibits scraping, and as we’ve alleged, the reported issue expressly admits that CCDH engaged in scraping and collecting user data,” Hawk said. “It’s not up to CCDH to decide for everyone when those things can be done based on what they believe is a higher cause.”

A Clinton appointee, Breyer pointed that that X’s complaint did not mention security when it estimated the damages. He told Hawk he didn’t believe that the case was about data security but instead was about restricting damaging information.

To hold CCDH responsible for the loss of ad revenue caused by any breach of contract, X has to prove that any potential harm was foreseeable by CCDH.

Breyer noted that X changed its terms of service after Musk purchased it, allowing the problematic content that CCDH reported on. CCDH could not have foreseen those events when it originally signed up for Twitter, he said, and thus it would be hard to hold them legally accountable for their reporting.

“The defendants argued that it was not foreseeable when they entered into the agreement that Twitter would allow neo-nazis to use the platform again,” Breyer said. “That’s exactly what they’re saying in their publications: 'Look at how X has changed.'"

“In order for you to collect one dime of these damages, they need to be foreseeable,” Breyer added.

Hawk replied that CCDH intended their statements about the changes in policy to motivate advertisers to not spend money on X.

The platform’s terms of service were subject to change, he said, and CCDH should have known that when they signed up.

Breyer said that Hawk’s explanation “reduces foreseeability to one of the most vapid extensions of law I’ve ever heard.”

“I’m not saying because the policy says it may change that it is foreseeable," Hawk replied, but "they entered into new agreements enforceable under the law."

Representing CCDH, attorney John Quinn reiterated that X never pleaded any claims about security in its complaint. He also said the center never scraped data from Twitter.

“CCDH used a tool that just runs searches for certain people in Twitter search function so they could see what public tweets those people were putting out, and then commented on it,” Quinn said.

Any harm that comes from that would be the result of an advertiser deciding to pull out — which they have the right to do, he argued. He stressed that under California contract law, damages are not recoverable when they "flow through the independent decisions of third parties."

Hawk asked for leave to amend the case to plead more facts about the user data claims. He said he could not take CCDH’s word that no files were corrupted or changed.

Quinn told Breyer that X just wanted to endlessly amend their complaints even though the damages were implausible.

“Using their search function to look at what people are saying is not scraping by any traditionally understood definition,” he said.

It would fly against free speech, consumer protection and anti-SLAPP principles if a court were to "give Elon Musk and X Corp the power to say: ‘Anybody who uses our search function and looks at tweets, if you use an automated tool in any way, we can come after you,'" Quinn said.

Breyer took the matter under submission.

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