Elon Musks X Sues Advertisers Accused of an Illegal Boycott: Now It Is War

 Posted on July 28, 2024  |  7 minutes  |  1300 words  |  Reinaldo Massengill

Elon Musk once told advertisers — including Disney — who pulled their ad dollars from X, the social network formerly known as Twitter, to “Go fuck yourself.” Now Musk’s X has filed an antitrust lawsuit against a trade group and several advertisers, alleging they conspired to withhold “billions” of dollars in ad spending over concerns that X would “deviate from certain brand safety standards for advertising.”

X’s attorneys filed the lawsuit Tuesday in the U.S. District Court for the Northern District of Texas. A copy of the lawsuit is available at this link (via the New York Times).

“We tried peace for 2 years, now it is war,” Musk posted on X about the lawsuit.

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Musk quoted a post by X CEO Linda Yaccarino, titled “An open letter to advertisers,” which said in part, “To put it simply, people are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott… The illegal behavior of these organizations and their executives cost X billions of dollars.”

What’s the point? The legal action certainly will do nothing to persuade advertisers who aren’t buying ads on X to suddenly decide to do so. X’s lawsuit seeks unspecified monetary damages and “injunctive relief under the antitrust laws of the United States.” According to the lawsuit, an initiative from industry trade group World Federation of Advertisers called the Global Alliance for Responsible Media (GARM) represented a conspiracy — joined by dozens of advertisers — to “collectively withhold billions of dollars in advertising revenue” from X. U.S. advertising revenue on X in 2023 plummeted 52%, to $1.13 billion, according to estimates from market researcher eMarketer, which forecast the company’s 2024 ad sales to decline slightly to $1.10 billion

The lawsuit comes a little over a month after X announced that the company had “reinstated our relationship with the @wfamarketers Global Alliance for Responsible Media. As of today, X is included as a member of #GARM… X is committed to the safety of our global town square and proud to be part of the GARM community!”

According to X’s suit, “As a condition of GARM membership, GARM’s members agree to adopt, implement and enforce GARM’s brand safety standards, including by withholding advertising from social media platforms deemed by GARM to be non-compliant with the brand safety standards.”

On its website, the World Federation of Advertisers says, “The GARM framework is broad and apolitical and allows individual members to determine which content is suitable for their own advertising support. GARM does not look at harmful content or content risk through a political lens, nor does it advocate doing so. Suggestions that GARM practices may impinge on free speech are a deliberate misrepresentation of GARM’s work. GARM is not a watchdog or lobby. GARM does not participate in or advocate for boycotts of any kind.” The trade group says it established GARM in 2019 “to help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization via advertising.”

The lawsuit alleged that major brand advertisers — including Unilever, Mars Inc., CVS Health and renewable energy company Ørsted, which are named as defendants — agreed to abide by GARM’s standards to “abruptly and in lockstep, boycott Twitter by discontinuing entirely or substantially reducing their previously substantial advertising purchases from Twitter.”

A spokesman for the WFA declined to comment. Reps for Unilever, Mars Inc., CVS Health and Ørsted did not immediately respond to requests for comment.

X’s lawsuit alleged that the advertisers’ “boycott” violated Section 1 the U.S.’s Sherman Act antitrust law, which broadly prohibits agreements among distinct actors that unreasonably restrain trade, “by withholding purchases of digital advertising from Twitter.”

“The conduct of Defendants and their co-conspirators alleged herein is per se illegal, or, in the alternative, illegal under the Rule of Reason or ‘quick look’ analytical framework,” the X lawsuit said. “There are no procompetitive effects of the group boycott, which was not reasonably related to, or reasonably necessary for, any procompetitive objectives of the GARM Brand Safety Standards.”

The “unlawful conduct” alleged by X is the subject of “an active investigation” by the House of Representatives’ Committee on the Judiciary, the lawsuit said. The committee’s interim report issued on July 10 concluded that, “The extent to which GARM has organized its trade association and coordinates actions that rob consumers of choices is likely illegal under the antitrust laws and threatens fundamental American freedoms. The information uncovered to date of WFA and GARM’s collusive conduct to demonetize disfavored content is alarming.”

Last November, X and Musk sued Media Matters, alleging the liberal watchdog group “knowingly and maliciously manufactured” research depicting neo-Nazi and white-nationalist posts on X next to ads for Apple, Bravo, IBM, Oracle and Comcast’s Xfinity. Following the Media Matters report and Musk’s endorsement of an anti-Semitic conspiracy theory, several large advertisers said they were halting their spending on X — either because of the Media Matters reports, Musk’s post or a combination of both.

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