In October, X rolled out a new ad format that appeared to serve paid posts without calling them ads. Experts speculated that the messages could violate U.S. laws against misleading advertising. Today, advertising industry watchdog Check My Ads filed a complaint petition with the Federal Trade Commission, requesting that the regulator investigate X’s messages, which the complaint calls “inherently misleading.”
Sarah Kay Wiley, director of policy and partnerships at Check My Ads, says inconsistent labeling around ads leaves users vulnerable to scammers.
“If these ads are not disclosed, I think scams will multiply very quickly on the platform,” she says.
Check My Ads’ complaint alleges that even if users are able to discern that unlabeled content is an advertisement, it can be difficult to understand why they are being targeted or how their data is being used. “We find that hyperlinks are broken when people click on ‘Why am I being targeted by this ad?’ “People can’t even get information about it,” says Wiley.
X did not immediately respond to a request for comment.
When Elon Musk bought X, then Twitter, in October 2022, advertising represented more than 90% of the company’s revenue. Musk next licensed more than half of the company’s employees, including almost all those responsible for keeping hateful, violent or inappropriate content off the platform. These changes left advertisers worried that their content would appear alongside hateful, violent or racist speech. Experts now expect X revenue to fall 54 percent This year. Although X claimed that advertisers would return, one October study from watchdog group Media Matters for America found that these advertisers were spending 90% less than in the weeks before Musk’s buyout.
Wiley claims that X’s new ad format may be a liability for advertisers, who themselves could face compliance issues if their content is not properly labeled, and that that their posts are labeled as advertisements. Check My Ads included screenshots of these documents in its complaint to the FTC. This means that advertisers may believe their ads are correctly labeled when they are not. To complicate matters further, X began accepting ads from Google Ads and InMobi, third-party ad exchanges where advertisers can purchase ads, which then appear on directly with all its advertisers.