Check My Ads Complaint and Request For FTC Investigation Into X Advertising Practices
Check My Ads Complaint and Request For FTC Investigation Into X Advertising Practices
In the Matter of )
)
X Corp. )
________________________)
I. Introduction
1. Check My Ads Institute submits this complaint to request the Federal Trade
Commission investigate the business and advertising practices of X Corp., which
operates X, formerly known as Twitter, an online social media networking platform.
2. X Corp.’s business model primarily entails monetizing user information and selling
advertising. After losing approximately 60% of advertising revenue, X Corp. changed
how it discloses and labels advertisements. While X Corp. previously labeled
advertisements with a clear “Promoted” text label to which users were accustomed,
current research indicates that X Corp. no longer provides clear disclosures as to what
posts are paid-for content. X Corp.’s lack of disclosure misleads consumers that the
content and information they are consuming on the X platform is not paid for. This
misrepresentation tricks users into trusting content as organic and exacerbates the
opportunity for scams to occur.
5. Finally, X Corp. explains its user targeting practices via hyperlinks that are frequently
broken. This inconsistency in maintaining standard accessibility to explanations
hinders users from fully understanding the company’s advertising targeting process,
thereby diminishing the transparency and clarity crucial for an informed user
experience.
1
6. X Corp.’s lack of disclosures to consumers, misrepresentations to advertisers, and
flawed access to explanations about targeted advertising constitute unfair and
deceptive practices in violation of Section 5 of the Federal Trade Commission Act, as
well as X Corp.’s 2022 Stipulated Order with the Commission prohibiting X Corp.
from misrepresenting the extent to which it “targets advertisements to Users or enables
third parties to target advertisements to Users.”1 Check My Ads urges the Commission
to determine the extent to which the violations occur and to address them to the full
extent of the Commission’s authority.
II. Parties
7. Check My Ads Institute is a registered non-profit operating in the public interest. Check
My Ads is an independent watchdog reshaping the digital adtech industry and is
dedicated to ensuring a transparent information economy exists for consumers and
advertisers. Check My Ads is registered in Delaware.
8. X Corp. owns and operates the X platform, an online communication service. X Corp.’s
primary business model entails selling advertising, although it also offers paid
subscription options for users. X Corp. is a Nevada corporation with its headquarters
located at 1355 Market Street, Suite 900, San Francisco, CA 94103.
A. Background about X
10. To post or follow other accounts, users must register for an account. The main page for
all registered users who navigate to www.twitter.com or who open the mobile
application is known as the “timeline.” There are two timelines available: “For You”
and “Following.” The For You timeline displays a stream of posts recommended from
X, while the Following timeline displays posts from accounts the user has chosen to
follow.
11. As of November 13, 2023, X offers free and three paid tiers of accounts: Basic,
Premium, and Premium+, with more features available in each subsequent tier.
According to X, users with Premium accounts will see “approximately 50% fewer ads
in the For You and Following timelines” while users with Premium+ accounts will see
no ads in their For You and Following timelines.3 Users with Premium and Premium+
accounts are also eligible for X’s Ad Revenue Sharing program. With Ad Revenue
1
Modified Decision and Order, Twitter Inc., FTC Docket No. C-4316, Section F (May 26, 2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/2023062C4316TwitterModifiedOrder.pdf.
2
As of Nov. 13, 2023, www.x.com redirects to www.twitter.com.
3
Prices, X, https://help.twitter.com/en/using-x/x-premium#tbpricing-bycountry (last visited Nov. 13, 2023).
2
Sharing, users may receive a share of the revenue generated from verified accounts’
organic impressions of ads displayed in the replies of posts.4
12. On October 27, 2022, Elon Musk acquired X Corp., then Twitter, for $44 billion.5 On
April 4, 2023, attorneys for X Corp. disclosed in a court filing that Twitter, Inc. had
been merged into X Corp., a privately held corporation. X Holdings Corp. is the parent
corporation of X Corp.6 On May 12, 2023, Musk announced the appointment of Linda
Yaccarino, previously NBCUniversal’s advertising chief, as X Corp.’s Chief Executive
Officer. Both Yaccarino and Musk have communicated their desires for the X platform
to become the “everything app,”7 a “future state of unlimited interactivity – centered in
centered in audio, video, messaging, payments/banking – creating a global marketplace
for ideas, goods, services, and opportunities.”8
13. After acquiring Twitter, Musk directed at least five rounds of terminations, layoffs, or
other reductions to the company’s workforce from October 27, 2022, to December 14,
2022. By April 12, 2023, Musk publicly confirmed that the company’s workforce was
reduced by approximately 80%.9
14. On February 21, 2023, The Verge reported dozens of sales and engineering layoffs
relating to X’s ads business.10 A few days prior, on February 17, 2023, Musk posted that
X would be working to revamp how ads are targeted on the platform. Musk wrote:
“Sorry for showing you so many irrelevant & annoying ads on Twitter! We’re taking
the (obvious) corrective action of tying ads to keywords & topics in tweets, like Google
does with search. This will improve contextual relevance dramatically.”11 Previous
employees expressed skepticism of the plan to reporters and on the platform.12
4
Ads Revenue Sharing, X, https://help.twitter.com/en/using-x/creator-ads-revenue-sharing (last visited Nov. 13,
2023).
5
Kate Conger & Lauren Hirsch, Elon Musk Completes $44 Billion Deal to Own Twitter, N.Y. TIMES (Oct. 27,
2022), https://www.nytimes.com/2022/10/27/technology/elon-musk-twitter-deal-complete.html.
6
Defendant Twitter, Inc.’s Corporate Disclosure Statement and Certification of Interested Entities or Persons,
Loomer v. Meta Platforms, No. 22-CV-2646 (April 4, 2023) (ECF 123),
https://storage.courtlistener.com/recap/gov.uscourts.cand.395023/gov.uscourts.cand.395023.123.0.pdf.
7
Elon Musk (@elonmusk), X (Oct. 4, 2022), https://twitter.com/elonmusk/status/1577428272056389633.
8
Linda Yaccarino (@lindayaX), X (July 23, 2023), https://twitter.com/lindayaX/status/1683213895463215104.
9
Michelle Toh & Juliana Liu, Elon Musk says he’s cut about 80% of Twitter’s staff, CNN (April 12, 2023),
https://www.cnn.com/2023/04/12/tech/elon-musk-bbc-interview-twitter-intl-hnk/index.html.
10
Alex Heath, Elon Musk keeps laying off Twitter employees after saying cuts were done, THE VERGE (Feb. 21,
2023), https://www.theverge.com/2023/2/21/23609522/elon-musk-more-twitter-layoffs-sales-engineering-ads-
google-revamp.
11
Elon Musk (@elonmusk), X (Feb. 17, 2023), https://twitter.com/elonmusk/status/1626527183752802304.
12
Heath, supra note 10.
3
15. X Corp.’s primary source of revenue is monetizing user information, namely by using
such information to sell advertising. For instance, of the $1.18 billion in revenue
Twitter documented in Q2, 2022 (the last publicly available quarterly report), $1.08
billion flowed from advertising.13
16. After Musk’s acquisition of X Corp., many advertisers left the platform because of
concerns with the rise of hate speech and disinformation.14 On November, 22, 2022, the
Washington Post reported that over a third of X’s top 100 advertisers had stopped
advertising on the platform.15 Advertising revenue subsequently plummeted. On
September 4, 2023, Musk publicly confirmed that U.S. advertising revenue was down
60%.16
17. Meanwhile, valuation of X Corp. has dropped over 50%. Fidelity Investments
estimated the value of X Corp. at $15 billion at the end of May 2023 and in October,
2023, X Corp. valued its own equity at $19 billion, significantly lower from the $44
billion Musk paid for the platform in October 2022.17
13
Twitter Announces Second Quarter 2022 Results, PR NEWSWIRE (July 22, 2022),
https://www.prnewswire.com/news-releases/twitter-announces-second-quarter-2022-results-301591530.html.
14
Aisha Counts & Eari Nakano, Harmful Content Has Surged on Twitter, Keeping Advertisers Away, TIME (July 19,
2023) https://time.com/6295711/twitters-hate-content-advertisers/.
15
Naomi Nix & Jeremy B. Merrill, Advertisers are dropping Twitter. Musk can’t afford to lose any more, WASH.
POST (Nov., 22, 2022) https://www.washingtonpost.com/technology/2022/11/22/twitter-advertiser-exodus-musk/.
16
Elon Musk (@elonmusk), X (Sept. 4, 2023), https://twitter.com/elonmusk/status/1698755938541330907.
17
Alex Hern, Twitter’s value down two-thirds since Musk takeover, says investor, THE GUARDIAN (May 31, 2023),
https://www.theguardian.com/technology/2023/may/31/twitters-value-down-two-thirds-since-musk-takeover-says-
investor; Ryan Mac, Since Musk Bought X, Value Has Plummeted To About $19 Billion, N.Y. TIMES, Oct. 31, 2023,
at B3; see also Jess Weatherbed, X is testing new paid membership tiers to compensate for poor ad revenue, THE
VERGE (Oct. 6, 2023), https://www.theverge.com/2023/10/6/23906000/x-twitter-new-paid-membership-tiers-ad-
revenue.
4
B. Advertising Products offered by X
18. Although advertising revenue on X has dropped considerably, commercial entities still
regularly use X to promote offers or advertise to consumers, and many posts contain
links to other websites, including websites that offer products or services for purchase.
19. According to X Corp.’s website, X offers five main advertising categories or products:
(1) Promoted Ads, which appear within a user’s For You and Following timelines; (2) X
Amplify, which allows advertisers’ video ads to run before a publishers’ video content
or during a moment of their choice (X Amplify ads also appear within a user’s For You
and Following timelines); (3) X Takeover, which puts advertisers’ content as the first ad
on a users’ timelines or alongside the trending section; (4) X Live, which enables
advertisers to broadcast moments live on a users’ timelines; and (5) Dynamic Product
Ads, which feature advertisers’ products in users’ timelines that users have already
engaged with through retargeting.18
20. Until recently, advertisements were labeled and differentiated from non-paid for content
on users’ timelines by a “Promoted” label in the lower-left corner.
18
X Ad formats, X, https://business.twitter.com/en/advertising/formats.html (last visited Nov. 13, 2023).
5
21. Advertisements also included a specific menu when users clicked the three dots in the
upper-right corner. If the post was an advertisement a menu of options would appear for
the user. The options included “Report Ad,” and “Why this Ad?” These options only
appeared for paid ads.
6
22. As of November 9, 2023, each of the categories and formats described in paragraph 19
are communicated in X Corp.’s promotional materials for advertisers as including a
“Promoted” disclosure in the bottom-left corner of the post.19 See appendix for more
examples.
19
X Ad formats, X, https://business.twitter.com/en/advertising/formats.html (last visited Nov. 13, 2023).
7
23. X Amplify ads are also shown as including the “Promoted” label and an in-post label
with the text “video will play here after ad.”20
20
X Ad formats, X, https://business.twitter.com/en/advertising/formats.html (last visited Nov. 13, 2023); Amplify
Pre-roll, X, https://business.twitter.com/en/products/amplify-pre-roll.html (last visited Nov. 13, 2023).
8
(Source: X Amplify Pre-roll promotional website.)
24. In July 2023, users noticed a change in the formatting labeling advertisements as such.
Instead of the “Promoted” label clearly visible and known to users, some advertisement
posts began to include smaller “Ad” label in the upper-right corner.
(Source: Post example appearing on user’s Following Timeline. Viewed by Check My Ads, Oct. 4, 2023.)
9
25. Beginning in September 2023, users reported a lack of any type of label differentiating
advertisements from non-paid content. Rather, advertisements were being shown to
users as organic, non-paid for posts. Users were confused as to why certain posts were
appearing in their timelines as they were not following the accounts associated with the
advertisements. Users were only able to discover that those posts were undisclosed
advertisements after clicking on the three dots in the upper right-hand corner and
viewing the menu options discussed above, paragraph 21. Users alerted Check My Ads
to the change and sent numerous examples. A review of the examples revealed a
significant lack of disclosure for both text-based posts as well as video-based posts.
Furthermore, unlabeled advertisements were appearing in both users’ For You and
Following timelines. Journalists have also detailed similar problems with X Corp.’s
disclosures.21
(Source: Video advertisement appearing on user’s For You Timeline on mobile device. Reviewed by Check
My Ads Oct. 10, 2023.)
21
See, e.g., Matt Binder, X is no longer labeling ads for some users, MASHABLE (Sept. 8, 2023),
https://mashable.com/article/twitter-x-removes-ad-labels-for-some-users; Matt Binder, X rolls out new ad format
that can’t be reported, blocked, MASHABLE (Oct. 6, 2023), https://mashable.com/article/twitter-x-new-clickbait-ad-
format.; Wes Davis, X users report unlabeled clickbait ads that you can’t block or report, THE VERGE (Oct. 7, 2023)
https://www.theverge.com/2023/10/7/23907424/x-unlabeled-ads-posts-cant-block-report-chumbox.
10
(Source: Text advertisement appearing on user’s For You Timeline on mobile device. Reviewed by Check
My Ads Oct. 6, 2023. This example highlights that the three dots in the upper right corner are also
missing.)
11
26. On September 16, one user, @Myles_Younger, posted to the X platform about their
frustrations being served advertisements that were not disclosed as such. A verified
account belonging to Brian Torpey, Global Head of Revenue Product Specialists at
Twitter,22 replied “The ad you’re referring to is related to our Amplify pre-roll product
where the ad attribution is displayed on the pre-roll advertisement itself, which always
appears with and must be viewed before viewing a partner’s video content. The content
is in your TL because it’s being promoted.”
22
As of November 8, 2023, Torpey’s LinkedIn account lists his employer as Twitter, not X Corp.
12
27. An informal review of X Amplify pre-roll advertisements completed by Check My Ads
revealed that video advertisements were indeed missing the “Promoted” label in the
lower-left corner as well as the “video will play after ad” text located within the post as
communicated to advertisers on X Corp.’s website – see paragraph 23. Rather, these in-
post disclosures do not appear and there is no indication a post is an ad while the video
plays. In addition, Torpey’s explanation described above confirmed that the text-based
in-post labels, communicated to advertisers, do not in fact appear on X Amplify pre-roll
advertisements. The lack of disclosure misleads users to believe that the posts are non-
paid and organically appearing in their timelines for other reasons such as following an
account.
(Source: Video advertisement appearing on user’s Following Timeline on web. Reviewed by Check My Ads
Oct. 4, 2023. No label is visible.)
13
(Source: Video advertisement appearing on user’s Following Timeline on web. Reviewed by Check My Ads
Sept. 8, 2023. No in-post label is visible.)
14
(Source: Video advertisement appearing on user’s Following Timeline on web. Reviewed byCheck My Ads
Sept. 8, 2023. No in-post label is visible.)
15
B. Trouble Accessing Ad Information
28. As described in paragraph 21, users were previously able to learn more about why they
were seeing a specific advertisement and how they were being targeted by clicking the
three dots in the upper-right corner, which would then prompt a menu with several
options, including “Report Ad” and “Why this Ad?”
29. However, beginning in September 2023, users reported to Check My Ads that selecting
“Why this Ad” frequently returned an error message or a blank screen. Users lack of
accessibility as to how and why they were being targeted with specific advertisements
occurred on both X Corp.’s website and on mobile applications.
(Source: Video advertisement appearing on user’s For You timeline on mobile. Reviewed by Check My Ads
Oct. 4, 2023. Link to “Why am I seeing this ad” is not available.)
16
(Source: Video advertisement appearing on user’s Following Timeline on web. Reviewed by Check My Ads
Nov. 7, 2023. Link to Why This Ad is broken.)
17
IV. Legal Analysis
30. Section 5 of the Federal Trade Commission Act prohibits “unfair or deceptive acts or
practices in or affecting commerce.”23 When the Commission has reason to believe that
any person or corporation has used or is using unfair or deceptive practices in or
affecting commerce, it shall issue a complaint against such person or corporation in an
administrative proceeding, if it believes such a proceeding to be in the public interest.24
31. The FTC Policy Statement on Deception provides that the Commission will find
deception if there is a representation, omission, or practice that is likely to mislead the
consumer acting reasonably under the circumstances, to the consumer’s detriment.25
33. In addition, X Corp.’s inconsistency of disclosures and label types further misleads
users. Applying disclosures to some advertisements and not others leads users to form
inaccurate expectations about the nature of the content they are viewing on their
timelines. If one post is correctly disclosed and labeled as an advertisement and the
other not, users will expect the unlabeled post to be organic, non-paid content.
34. Furthermore, X Corp.’s nondisclosure of paid advertising will likely lead to the
proliferation of scams occurring on the platform. Commission data show that from
January 2021 through June 2023, consumers lost $2.7 billion to scams on social media,
far higher than any other method of contact.26 In March 2023, the Commission
requested platforms, including X Corp., provide information to the Commission about
23
Federal Trade Commission Act § 5, 15 U.S.C. § 45(a)(1) (2006).
24
Id. § 45(b).
25
FTC Deception Policy Statement, appended to Cliffdale Associates, 103 F.T.C. 174 (1984).
26
FTC Data Shows Consumers Report Losing $2.7 Billion to Social Media Scams Since 2021, FEDERAL TRADE
COMMISSION (Oct. 6, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/10/ftc-data-shows-
consumers-report-losing-27-billion-social-media-scams-2021.
18
their steps to screen advertisers as well as their methods to disclose advertising.27 It is
unclear if X Corp. replied to the Commission’s request. However, not disclosing what
posts are advertisements to users gives scammers an edge to prey on unsuspecting
individuals.
36. In 2011, the Commission accused X Corp. of deceptively misrepresenting its data
privacy and security practices to users. To address those allegations, X Corp. entered
into an FTC administrative order that prohibited X Corp. from making similar
misrepresentations in the future.28 In 2022, the Commission brought forth a lawsuit
seeking civil penalties and injunctive relief against X Corp., alleging a recurrence of
deceptive practices that violated the 2011 Administrative Order.29 The parties settled
these new allegations through a Stipulated Order, with X Corp. agreeing to pay a $150
million civil penalty and consenting to modifications of the 2011 Administrative Order
(“2022 Administrative Order”).30
37. The 2022 Administrative Order was designed to ensure X Corp. protects users’ privacy
and secures their data. The Order also prohibits X Corp. from making
misrepresentations to users about the extent to which X Corp. “targets advertisements
to Users or enables third parties to target advertisements to Users.”31
38. By failing to adequately disclose advertisements, X Corp. creates a situation where the
platform inevitably misrepresents the methods employed to target users or facilitate
third-party ad targeting. The absence of proper disclosure leaves users unaware and
unsuspecting, as they have no reason to know that they are being targeted with
information in the first place.
27
Lesley Fair, Bad ads on social media: FTC asks platforms about their screening policies, FEDERAL TRADE
COMMISSION (March 22, 2023), https://www.ftc.gov/business-guidance/blog/2023/03/bad-ads-social-media-ftc-asks-
platforms-about-their-screening-policies.
28
Decision and Order, In the Matter of Twitter, Inc., FTC Docket No. C-4316 (March 2, 2011),
https://www.ftc.gov/sites/default/files/documents/cases/2011/03/110311twitterdo.pdf.
29
Complaint for Petitioners, U.S. v. Twitter., Inc., No. 3:22-cv-3070 (D. Cal. May 25, 2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/2023062TwitterFiledComplaint.pdf.
30
Modified Decision and Order, Twitter Inc., FTC Docket No. C-4316 (May 26, 2022),
https://www.ftc.gov/system/files/ftc_gov/pdf/2023062C4316TwitterModifiedOrder.pdf.
31
Id at Section F.
19
39. Finally, users are given an imperfect mechanism to obtain information on
advertisements that are labeled. As described in paragraphs 28 and 29, links to
explanations about why and how a user is targeted with a specific advertisement are
frequently broken. This inconsistency in maintaining standard accessibility to
explanations hinders users from gaining a basic understanding of the advertising
targeting process, thereby diminishing the transparency and clarity crucial for an
informed user experience.
40. Based on X Corp.’s violations of Section 5 the Federal Trade Commission Act and the
2022 Administrative Order, Check My Ads asks the Commission to investigate and
seek robust remedies, including but not limited to:
Respectfully submitted,
Claire Atkin
CEO, Check My Ads
20
Appendix: Promotional Materials on X Corp.’s Advertising Formats
All of the following screenshots are from X Corp.’s business website, laying out the formats for
each type of advertisement.32
32
X Ad formats, X, https://business.twitter.com/en/advertising/formats.html (last visited Nov. 13, 2023
21
22
23