AUSTIN, Texas (Diya TV) — Elon Musk’s social media platform, X, filed a federal lawsuit against a coalition of advertisers, accusing them of orchestrating a boycott that allegedly cost the company billions in revenue. The lawsuit, lodged in a Texas federal court, targets the World Federation of Advertisers (WFA) and its Global Alliance for Responsible Media (GARM), alongside prominent member companies Unilever, Mars, CVS Health, and Ørsted.
The legal action asserts that these entities conspired to withdraw advertising from X, previously known as Twitter, after Musk’s acquisition of the platform for $44 billion in late 2022. This alleged boycott, according to the lawsuit, violated antitrust laws by coordinating a massive pullback of advertising dollars, severely impacting the platform’s financial health.
Musk, who has often been vocal on his social media platform, posted, “now it is war,” signaling his frustration over the past two years of what he claims were fruitless attempts to reconcile with advertisers. X’s CEO Linda Yaccarino echoed Musk’s sentiment in a video statement, highlighting that the lawsuit is partially based on findings from the U.S. House Judiciary Committee, which purportedly uncovered evidence of an illegal boycott orchestrated by the advertising group.
In a recent congressional hearing, the Republican-led committee examined whether existing laws are adequate to prevent anti-competitive behavior in online advertising. During this hearing, a top executive from Unilever defended their advertising decisions, stating, “No platform has a right to our advertising dollar..
The lawsuit delves into the early days following Musk’s takeover when X’s brand safety standards came under scrutiny. GARM, known for its role in helping brands avoid harmful content, allegedly called for compliance with its standards, leading many affiliated companies to abruptly cut or halt their advertising on X.
GARM, an initiative run by the WFA, includes over 100 prominent companies. While GARM asserts that it does not interfere with its members’ individual advertising decisions, X’s lawsuit claims otherwise. The suit alleges that GARM’s actions were part of a coordinated effort to undermine X’s advertising revenue by promoting a collective boycott.
This isn’t the first legal battle X has faced over its advertising struggles. Last year, the platform sued the Center for Countering Digital Hate (CCDH), alleging that the nonprofit’s reports on hate speech drove advertisers away. The case was dismissed by a federal judge in March, who criticized the lawsuit as an attempt to penalize protected speech. Additionally, X has ongoing litigation against Media Matters, which reported on the prevalence of antisemitic content on the platform, contributing to another significant advertiser exodus.
The impact of these advertiser withdrawals has been substantial. X’s advertising revenue has plummeted, from $4.5 billion in 2021 to an anticipated $2 billion this year. Despite claims of compliance with brand safety standards comparable to industry peers, X has struggled to regain advertiser confidence.
In a statement, a spokesperson for the WFA declined to comment on the ongoing litigation. However, the organization maintains that GARM’s purpose is to set standards for digital advertising environments without dictating individual members’ actions.
The outcome of this lawsuit could have significant implications for the advertising industry and how social media platforms manage brand safety and advertiser relations.
