Government "reports" about speech on social media are dubious when they choose who heads the FTC. It's a fine line that might be worth a court case or two depending on details.
Public shock about government involvement in speech is par for the course, in the US anyway.
The government has as much right to report ToS violations as any other user.
Having VIP lanes isn't a great look but it isn't surprising.
The government are in a position were they can force legal changes if it feels corporations are abusing their power. Moderation is important but of course that has to be balanced against the risks of censorship. Of course neither are desirable but we are essentially talking about the reporting of individual tweets, not requests for systemic changes to the platform.
If this story pointed to something more serious like requests to access to the moderation platform or keyword manipulation, of course this would be breaching an entirely different red line.
[0] https://news.ycombinator.com/item?id=33823725