Several significant businesses are being sued by Elon Musk’s X/Twitter, which claims they illegally planned to boycott the website.
It alleges that it has been cheated out of “billions of dollars” in advertising revenue by the food companies Unilever and Mars, the private healthcare provider CVS Health, the renewable energy business Orsted, and a trade group known as the World Federation of Advertisers (WFA).
The complaint concerns the disastrous period of 2022 that followed Musk’s acquisition of X, which was then known as Twitter when advertising revenue plummeted. Because of concerns that the platform’s new owner needed to take online content removal more seriously, some businesses were reluctant to place advertisements on it.
Statements from X/Twitter leadership
Linda Yaccarino, CEO of X, stated: “When the marketplace of ideas is restricted, people suffer. No tiny number of individuals need to control all that is monetarily valued.”
“After two years of trying to be polite, all we got was empty words,” tweeted Musk. It is war right now.”
The WFA or the accused companies did not immediately answer requests for comment.
Allegations of antitrust violations
When advertisers shied away from the platform in the year following Musk’s acquisition of the company, X’s advertising revenue fell by more than half. X claims in its case that the accused companies wrongfully withheld spending by adhering to safety guidelines established by the Global Alliance for Responsible Media (GARM), a WFA project.
The organization’s declared goal is to “help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization via advertising.”
X contends that by doing this, the businesses violated US antitrust, or competition, law by acting against their own financial self-interests in a conspiracy against the platform.
Legal opinions and potential outcomes
Under Barack Obama, Bill Baer served as the assistant attorney general for the antitrust division of the Department of Justice. He predicted that the lawsuit would not be successful.
“Generally speaking, a boycott driven by political reasons does not violate antitrust laws. According to the First Amendment, it is protected expression,” he declared.
The boycott, according to Vanderbilt University professor Rebecca Haw Allensworth, “was really trying to make a statement about X’s policies and their brands”.
“That’s protected by the First Amendment,” she stated.
Companies are not allowed to be forced to purchase advertising space on social networking sites, even if the lawsuit is successful.
A court order prohibiting any further attempts by X to collude to withhold advertising spending, along with undisclosed damages, is being sought.
According to the company’s lawsuit, it has implemented brand-safety measures that “meet or exceed” Garm’s requirements and are equivalent to those of its competitors. Moreover, it claimed that X is now a “less effective competitor” in the market for digital advertising.
In a different complaint filed on Tuesday against the World Federation of Advertisers, the right-wing influencer-favored video-sharing platform Rumble made similar allegations.
Final thoughts
Elon Musk’s X, formerly known as Twitter, is suing several major companies and a trade group for allegedly boycotting the platform, resulting in significant advertising revenue losses. The lawsuit, which faces skepticism regarding its success, claims the companies’ adherence to safety guidelines constitutes an illegal conspiracy against X.
Despite X’s efforts to meet brand-safety standards, it remains a less competitive player in the digital advertising market. The outcome of this legal battle could have far-reaching implications for the dynamics between social media platforms and advertisers.
(Tashia Bernardus)