Why Elon Musk's X is suing advertisers
Elon Musk-owned social media platform X, formerly known as Twitter, has initiated an antitrust lawsuit against the Global Alliance for Responsible Media (GARM) and several of its members. The defendants include firms like Mars, Unilever, CVS Health, and Danish renewable energy company Orsted. The announcement was made by CEO Linda Yaccarino in an open letter on X where she accused the group of conducting an "illegal boycott" against the platform.
Allegations of conspiring to withhold advertising revenue
The lawsuit alleges that GARM, a part of the World Federation of Advertisers (WFA), conspired with numerous non-defendant co-conspirators to collectively withhold billions in advertising revenue from X. The WFA, also named in the lawsuit, established GARM to create brand safety guidelines for online advertisers. Yaccarino claims this boycott was designed to deprive X's users of the "Global Town Square."
Lawsuit claims advertisers acted against self-interest
The lawsuit, filed in a federal court in Texas, alleges that the advertisers acted against their own economic self-interests in a conspiracy against X that violated US antitrust law. Christine Bartholomew, an antitrust expert, told Reuters that lawsuits alleging unlawful boycotts can face a high bar. X must prove there was an actual agreement to boycott joined by each advertiser, which is no small challenge in cases where an agreement might be implicit.
X's history of legal actions against advertiser exodus
This isn't the first instance of X taking legal action against advertiser exodus. Previously, X sued the Center Countering Digital Hate (CCDH), an anti-hate group that published research indicating that X failed to remove hateful posts on its platform. The lawsuit was later dismissed by a judge who stated that X was attempting to "punish" CCDH for sharing critical research. Additionally, X is suing Media Matters, a watchdog group that reported that X had displayed ads alongside anti-Semitic content.
X's ad revenue declines amid brand safety concerns
X's ad revenue has been on the decline for months following its acquisition by Musk in 2022. Some advertisers have expressed concerns about their brands appearing next to harmful content that might have been removed under previous ownership. The lawsuit asserts that X has implemented brand-safety standards comparable to those of its competitors and that "meet or exceed" measures specified by GARM. However, it also concedes that X has become a "less effective competitor" in the sale of digital advertising.
