Elon Musk’s X Faces Setback as Court Upholds California Law on Social Media Content Moderation Disclosure

In a setback for Elon Musk’s X, the social media giant formerly known as Twitter, a California court ruled against the company’s attempt to overturn a state law mandating public disclosure of content moderation practices. X had filed a lawsuit in September, asserting that the law, which requires social media companies to provide detailed reports on their content moderation approaches, violated its free speech rights under the U.S. Constitution and California’s state constitution.

U.S. District Judge William Shubb, in an eight-page decision, dismissed X’s legal challenge, emphasizing that while the reporting obligation imposes a substantial compliance burden on social media companies, it is not deemed unjustified or unduly burdensome within the framework of First Amendment law. X has not yet responded to requests for comments on the ruling.

The law in question compels social media companies with significant annual revenue to release semiannual reports outlining their content moderation strategies, along with data on objectionable posts and their resolutions. Judge Shubb is scheduled to convene with the legal teams involved in the case on Feb. 26 for a scheduling conference.

Integral to Shubb’s decision were the “terms of service” requirements outlined in the law, which he deemed crucial and suggested could heavily influence user decisions. X has faced criticism for its content moderation policies, leading to several companies pausing their advertising on the platform. Since Elon Musk assumed control of X in October 2022, monthly U.S. ad revenue reportedly experienced a decline of at least 55% year-over-year each month, based on third-party data disclosed to Reuters in October.