Elon Musk has filed a lawsuit against several companies accusing them of engaging in an unlawful advertiser boycott that has allegedly deprived the platform of billions of dollars in revenue.
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The Lawsuit was Filed in a Texas Federal Court and Targets the Following Entities:
- Unilever
- Mars
- CVS Health
- Ørsted
- World Federation of Advertisers (WFA)
Elon Musk purchased Twitter for $44 billion in 2022 and rebranded it as X. The takeover was by changes including mass layoffs and a shift in content moderation policies leading to criticism and concern among advertisers.
Since Musk’s acquisition, X has experienced a decline in advertising revenue. Advertisers have expressed concerns about the platform’s association with harmful content including pro-Nazi posts and misinformation.
The lawsuit was filed against the World Federation of Advertisers including major companies such as Unilever, Mars, CVS Health and Ørsted.
It claims these advertisers unlawfully conspired to withhold billions of dollars in advertising revenue violating US antitrust laws.
X accuses the Global Alliance for Responsible Media (GARM) of orchestrating a boycott that led to a huge drop in advertising revenue.
The lawsuit argues that GARM members collectively withheld advertising dollars causing financial harm to the platform.
Advertisers reportedly acted in response to brand safety concerns, fearing their ads might appear next to harmful or illegal content on X.
X claims that it has applied brand-safety standards comparable to its competitors and that these standards meet or exceed measures specified by GARM.
X’s CEO Linda Yaccarino argues that the boycott constricts the marketplace of ideas potentially harming free speech.
The lawsuit seeks unspecified damages and a court order against any continued efforts to conspire to withhold advertising dollars.
Christine Bartholomew, an antitrust expert and professor at the University at Buffalo said that proving an unlawful boycott requires demonstrating a specific agreement among advertisers.
X has previously filed lawsuits against organizations like the Center for Countering Digital Hate and Media Matters, accusing them of distorting content representation on the platform.
Unilever and other accused companies have yet to comment on the lawsuit. Unilever previously addressed its control over advertising spending and commitment to platforms that do not harm its brand.
GARM claims it does not interfere with member decisions regarding advertising investments on specific platforms.
The organization focuses on helping the industry address harmful content and its monetization through advertising.
X claims that these companies along with the WFA have unlawfully conspired to boycott the platform.
According to the lawsuit, this collective action has caused financial harm to X, which relies heavily on advertising revenue.
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The lawsuit centers on a WFA initiative known as the Global Alliance for Responsible Media (GARM), which aims to address harmful content on digital platforms.
X alleges that GARM’s guidelines have been used as a tool to coordinate an unfair boycott against the platform.
X argues that the companies involved acted against their own economic interests by withholding advertising spending.
The platform contends that this action was not based on sound business judgment but rather a coordinated effort to damage X.
The lawsuit seeks unspecified damages for the alleged financial losses incurred due to the boycott.
Additionally, X is requesting a court order to prevent any conspiratorial efforts to withhold advertising dollars from the platform.
One incident involved ads appearing next to posts expressing pro-Nazi sentiments, which fueled concerns about brand safety.
By November 2023, many advertisers began distancing themselves from X. This was by Musk’s own controversial statements and interactions with users on the platform.
The Global Alliance for Responsible Media was established to create industry standards for addressing harmful online content.
Its guidelines aim to ensure that digital advertising does not support or appear alongside illegal or harmful material.
Legal experts suggest that proving collusion among advertisers will be challenging. Bill Baer, former Assistant Attorney General for the Department of Justice’s Antitrust Division, said that politically motivated boycotts are typically protected under the First Amendment.
Elon Musk has been vocal about his frustrations with the advertising industry. In a tweet, he stated, “We tried being nice for 2 years and got nothing but empty words. Now, it is war.”
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