RESEARCH: Musk vs advertisers: Can X win? - Breaking The News
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RESEARCH: Musk vs advertisers: Can X win?

EPA-EFE/ETIENNE LAURENT

Elon Musk’s X Corp. filed an antitrust lawsuit in August against a group of advertisers, including Unilever, Mars and CVS, accusing them of conspiring to withhold "billions of dollars in advertising revenue" from Musk's social media platform X, formerly known as Twitter. He alleged that the companies acted collectively through an initiative called the Global Alliance for Responsible Media (GARM), which decided Twitter no longer complied with its standards after being acquired by Musk and instructed its members to boycott it. In the lawsuit, X said the advertisers’ actions continue to affect it to this day, "despite X applying brand safety standards comparable to those of its competitors and which meet or exceed those specified by GARM."

Musk, a self-described "free speech absolutist," bought Twitter in 2022 and announced his intention to protect the users’ freedom to post "pretty outrageous things that are in the bounds of the law." Within a year, a number of major companies, including Disney, Apple, Comcast, Paramount, and NBCUniversal, paused advertising on the social media platform citing a report that found their ads appeared next to posts containing far-right and hate speech content. In November 2023, the New York Times calculated X could lose as much as $75 million in advertising revenue by the end of that year, although the figure was not officially confirmed.

In the lawsuit, X argued that GARM is "forcing changes to the business operations of social media platforms" by requiring advertisers to adopt its standards and act collectively to impact X, giving them "market power that they could not have achieved unilaterally." It said the alleged boycott also influenced new customers, who were "deterred or restrained" from purchasing ads. "As demand for advertising on X has declined as a result of the boycott, the price X’s remaining advertisers are willing to pay has declined as well," the company said.

Following the lawsuit, GARM’s founder, the World Federation of Advertisers (WFA), said it will shut down the initiative, saying that "recent allegations that unfortunately misconstrue its purpose and activities have caused a distraction and significantly drained its resources and finances." Meanwhile, Unilever denied that it was influenced to withdraw from X. "Unilever, and Unilever alone, controls our advertising spending," its US President Herrish Patel told Congress.

However, it seems improbable that X can win the lawsuit. The advertisers’ right to boycott X is likely protected by the same First Amendment that safeguards free speech on social media. X’s lawsuit alleged the advertisers violated antitrust laws, but it will be difficult to prove that their withdrawal from the platform resulted in a competitive disadvantage. As Unilever’s Patel said, "No platform has a right to our advertising dollar."

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