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What just happened? Elon Musk's conflict with advertisers took a shocking new turn yesterday when he announced his platform X, formerly Twitter, is suing a group of ad companies, along with individual firms, over an alleged coordinated boycott of the site. The suit claims this broke federal antitrust laws and caused X to lose revenue.
X filed the lawsuit in federal court in Texas on Tuesday against the World Federation of Advertisers (WFA) and member companies Unilever, Mars, CVS Health and Orsted. "We tried being nice for 2 years and got nothing but empty words. Now, it is war," Musk tweeted.
– Elon Musk (@elonmusk) August 6, 2024
The suit accuses the group's Global Alliance for Responsible Media initiative, or GARM, of collectively withholding "billions of dollars in advertising revenue" from X in the period following Musk's takeover in 2022. It added that the companies acted against their own economic self-interests in a conspiracy against X that violated US antitrust law.
GARM was launched in 2019 to help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization via advertising.
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," the lawsuit states. It alleges that members discontinued or sharply curtailed their ad spending on X after Musk took over.
"People are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott," wrote Linda Yaccarino, X's chief executive, in an open letter to advertisers. "The consequence – perhaps the intent – of this boycott was to seek to deprive X's users, be they sports fans, gamers, journalists, activists, parents or political and corporate leaders, of the Global Town Square."
GARM's website states that it "does not interfere with a member's decision as to whether or not to invest advertising resources on a particular website or channel."
X said it had applied brand-safety standards comparable to those of its competitors and that it meets or exceeds measures specified by GARM.
The lawsuit seeks to prevent GARM from continuing to make recommendations regarding advertising on X. It also seeks unspecified monetary damages. The WFA and the accused companies did not immediately respond to requests for comment.
To say Musk has had problems with advertising on X since he took over would be an understatement. X sued non-profit group Center for Countering Digital Hate after it wrote about hate speech on the platform, which Musk said drove away advertisers. A judge threw out the suit in March.
In November, IBM suspended its advertising on X after a report from nonprofit watchdog group Media Matters highlighted how adverts from tech brands had appeared on X next to content such as memes and posts that tout Adolf Hitler and the Nazi Party.
Watch my conversation with @ElonMusk: https://t.co/YedkELVhFn
– Andrew Ross Sorkin (@andrewrsorkin) November 29, 2023
More companies suspended their advertising on X following Media Matters' report. Musk responded by telling fleeing companies to "Go f**k yourself" during an interview at The New York Times Dealbook Summit, though he later said this was more a point about freedom of speech.
X is suing Media Matters over its report, with a trial set for April 2025.