By Mrinmay Dey
(Reuters) - Elon Musk's X on Thursday failed to block a California state law that requires social media companies to publicly disclose how they moderate certain content on their platforms.
X, formerly known as Twitter, in September sued California to undo the content moderation law, saying the law violated its free speech rights under the U.S. Constitution's First Amendment and California's state constitution.
The law requires social media companies with a sizable gross annual revenue to issue semiannual reports that describe their content moderation practices, and provide data on the number of objectionable posts and how they were addressed.
U.S. District Judge William Shubb in an eight-page decision dismissed the social media company's request.
"While the reporting requirement does appear to place a substantial compliance burden on social medial companies, it does not appear that the requirement is unjustified or unduly burdensome within the context of First Amendment law," Shubb wrote.
X did not immediately respond to a request for comment.
Shubb will meet with the lawyers in the case on Feb. 26 for a scheduling conference.
Shubb held "terms of service" requirements of the law to be integral and said their presence could be a major deciding factor for users.
X has been under fire regarding its content moderation rules, with many companies pausing advertising on the platform. Since Musk took over X in October 2022, its monthly U.S. ad revenue declined at least 55% year-over-year each month, according to third-party data provided to Reuters in October.
The social media platform also faces scrutiny in Europe. The European Union earlier this month said it was investigating X over suspected breaches of obligations, partly relating to posts following Hamas' attacks on Israel, its first probe under the Digital Services Act (DSA).
Following Hamas' Oct. 7 attacks on Israel, X and other social media companies were flooded with fake images and misleading information.
X said it remains committed to complying with the DSA and is cooperating with the regulatory process.
The case is X Corp v Bonta, U.S. District Court, Eastern District of California, No. 2:23-cv--01939.