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I guess it's easy to see from afar, but it's hardly surprising to me that advertisers are quick to bail from Twitter now; everyone has been twitchy since Musk took over.
Probability of this happening is low. "Elon Musk said" in general does not transfer to anything real in Twitter anymore.

His lawyers tell him that he does not want Media Matters lawyers to go trough discovery process.

Oh agreed, he is definitely somewhat detached from reality.
are there screenshots of the ads next to bad stuff from Media Matters?
I haven't seen any, but I have no doubt that they have the required proof.
so why wouldn't all the articles about this include the screenshots? Are they saving them for court or they are just too offensive to republish?
This from a guy that bulldozes his way past employee-relations laws, dismissing his own contractual and legal obligations like turning out sausages.
A genius plan. I'm sure the advertisers will rush back afterwards.
> “The split second court opens on Monday, X Corp will be filing a thermonuclear lawsuit against Media Matters and ALL those who colluded in this fraudulent attack on our company,” Musk said in a post on X, formerly known as Twitter.

Got a real Trump vibe here from Musk.

"Man pays billions of dollars for a personal bullhorn because he feels like he is not being worshipped enough".

That narcissistic void is getting so wide you can fly an Imperial cruiser through it.

My guess would be that Musk thinks they did some cajoling to get the ads to appear. That X probably has some sort of surface-level systems in place to avoid the problem, but that it falls apart for, say, your ad-friendly account follows a borderline ad-friendly account, and that likes or retweets ad-unfriendly content, so that content now appears in views further down the line that don't get filtered correctly.

But the point of media matters' article is that this still fails the test. It doesn't matter how contrived the situation is, because the scale of Twitter and Musk's actions to greatly increase ad-unfriendly posters have created a more advertiser-hostile environment.

There's also the issue of the ad-unfriendly accounts themselves. If I only follow ad-unfriendly accounts, then my timeline will only be ad-unfriendly content, so there is nowhere for ads to be placed except next to that content. Or else you just can't show an ad for that provider next to me, and I bet that conflicts in a hard and unpredictable way with a bunch of ad targeting heuristics and mechanisms in Twitter.

Didn't he say the same thing about suing Microsoft? LOL, who's going to take the little manbaby serious...