X Sues Advertisers Over Alleged Illegal Boycott
Published On: August 7, 2024
X, formerly known as Twitter, has filed an antitrust lawsuit against several major advertisers. The lawsuit, filed in federal court in Texas, accuses the World Federation of Advertisers (WFA) and their member companies, including Unilever, Mars, CVS Health, and Ørsted, of orchestrating an illegal boycott that has severely impacted X's revenue stream.
Elon Musk, who acquired Twitter in 2022 for $44 billion, has been vocal about his belief in free speech and a less restrictive approach to content moderation. However, his acquisition and subsequent changes to the platform's policies have been met with resistance from some advertisers who are concerned about brand safety standards.
The lawsuit centers around the Global Alliance for Responsible Media (GARM), an initiative by the WFA that aims to improve brand safety on digital platforms. According to X, GARM's members colluded to withdraw billions of dollars in advertising revenue from X, effectively using their collective market power to force the platform to adhere to specific content moderation standards.
The lawsuit claims that the actions of these advertisers amount to a coordinated and systematic illegal boycott, violating antitrust laws by suppressing competition and depriving X of substantial revenue. X argues that this collusion has hindered their ability to compete with other social media platforms, invest in new features, and engage users effectively.
In a video message posted on X, CEO Linda Yaccarino stated, "They conspired to boycott X, which threatens our ability to thrive in the future. That puts your global town square—the one place you can express yourself freely and openly—at long-term risk."
This lawsuit is part of a larger struggle between tech companies and advertisers over content moderation and brand safety. In recent years, advertisers have increasingly demanded stricter controls over where their ads appear, prompting platforms like X to navigate a complex landscape of free speech and brand safety.
The suit also references a report from the Republican-led House Judiciary Committee, which supports X's claims by suggesting that GARM and their members engaged in activities that could be considered anti-competitive. This investigation has emboldened X's legal action, with Musk encouraging other companies that feel similarly affected to join the fight.
Legal and industry reactions
Legal experts are divided on the potential success of X's lawsuit. While some argue that advertisers have the right to choose where they spend their money, others believe that the case could set a precedent for how industry groups influence market dynamics. Rebecca Haw Allensworth, an antitrust professor at Vanderbilt University Law School, noted that advertisers' actions might be protected under the First Amendment, as they pulled spending due to disagreements with X's policies.
Marketing consultant Ruben Schreurs commented that the lawsuit might be a desperate attempt to regain advertisers who have lost confidence in X. He stated, "To the extent that Elon hadn't already burned all bridges with the entire advertising community, I don't see how this will get any advertisers to come back to X."
Why this matters to you
As a social media user, the outcome of the legal battle between X and their advertisers could significantly impact your online experience. A stricter adherence to brand safety standards might limit the diversity of viewpoints and discussions on platforms like X, affecting the way you interact with content. Additionally, the lawsuit's resolution could reshape how social media platforms engage with advertisers, influencing their operations and ability to innovate.