X sues advertisers over alleged billion-dollar advertising boycott
X sues advertisers over alleged billion-dollar advertising boycott
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Elon Musk’s X (formerly Twitter) has filed a lawsuit accusing a coalition of major advertisers of antitrust violations, alleging that the group conspired to ‘boycott’ advertising on the platform. The lawsuit contends that a prominent ad industry organisation coordinated efforts to collectively withhold billions of dollars in advertising from the platform.
This action was reportedly driven by concerns that, following Musk’s acquisition of the platform in late 2022, it had strayed from established brand safety standards.
The group in question is the Global Alliance for Responsible Media (GARM). This voluntary initiative, managed by the World Federation of Advertisers, aims to assist brands in avoiding the placement of their ads alongside illegal or harmful content.
GARM has over 100 major companies among its members. Four of these companies, CVS, Unilever, Mars, and the Danish energy firm Ørsted, are named as defendants in a lawsuit filed in federal court in Texas on Tuesday.
This lawsuit represents X’s latest attempt to revive its core advertising business, which has significantly declined since Musk’s acquisition. Numerous brands have reduced their spending due to concerns that their ads could appear alongside misinformation or hate speech, which Musk has occasionally supported in the name of free speech. The lawsuit also continues Musk’s pattern of disputes with advertisers who are crucial to his revenue; last year, he told departing brands to “go f**k yourself.”
X’s leadership has fluctuated between portraying the platform’s ad business as recovering and struggling. However, X CEO Linda Yaccarino painted a grim picture in a video posted to the platform on Monday. She claimed that GARM members had conspired to boycott the micro-blogging platform, putting the company’s future at risk and placing it “at long-term risk” due to the loss of advertising revenue.
https://t.co/074br9nRLP
— Linda Yaccarino (@lindayaX) August 6, 2024
Yaccarino also posted an open letter addressed to advertisers, following which Musk quoted the same saying that “it is war” against them now.
According to the lawsuit, GARM 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.” After GARM publicly urged X to adhere to its brand safety standards following Musk’s acquisition, many companies affiliated with GARM “abruptly discontinued or sharply reduced their advertising expenditures,” the lawsuit claims.
GARM, however, states on its website that it “does not interfere with a member’s decision regarding whether or not to allocate advertising resources to a specific website or channel.”
Additionally, the lawsuit aims to block GARM from making further recommendations concerning advertising on X and seeks unspecified monetary damages.
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