They lost because a billionaire, who didn't like them for reasons entirely independent of the merits of the case, spent time and resources canvassing for opportunities to punish Gawker.

As Thiel himself said, "even someone like Terry Bollea who is a millionaire and famous and a successful person didn’t quite have the resources to do this alone."

Thiel also said that, but for his involvement the plaintiffs would have accepted a pittance. The outcome is largely a consequence of an the intervention of an outside party, not merely the merits of the case itself.