Elon Musk’s social networking platform X filed a lawsuit on Tuesday against a worldwide advertising coalition and a number of significant businesses, including CVS Health and Mars, alleging that they had illegally planned to boycott the website and reduce its earnings.
TakeAway Points:
- Elon Musk’s social media platform X sued a global advertising alliance and several major companies, including Mars and CVS Health, accusing them of unlawfully conspiring to boycott the site and causing it to lose revenue.
- According to the lawsuit, advertisers jointly withheld “billions of dollars in advertising income” from X, then known as Twitter, through an effort launched by the World Federation of Advertisers called the Global Alliance for Responsible Media.
X sues top companies
X filed the lawsuit in federal court in Texas against the World Federation of Advertisers, Unilever, and Danish renewable energy company Orsted, in addition to Mars and CVS Health .
The lawsuit said advertisers, acting through a World Federation of Advertisers initiative called Global Alliance for Responsible Media, collectively withheld “billions of dollars in advertising revenue” from X, previously known as Twitter.
It said they acted against their own economic self-interests in a conspiracy against the platform that violated U.S. antitrust law.
In a statement on Tuesday about the lawsuit, X’s chief executive, Linda Yaccarino, said, “People are hurt when the marketplace of ideas is constricted. No small group of people should monopolize what gets monetized.”
X Ad revenue previously declined
Ad revenue at X slumped for months after Musk bought the company in 2022. Some advertisers had been wary of ad spending under Musk amid questions and fears that their brands would appear next to harmful content that their prior owners might have removed.
The advertising group launched the responsible media initiative in 2019 to “help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization via advertising.”
Reactions to the lawsuit
Christine Bartholomew, an antitrust expert and professor at the University of Buffalo’s law school, said that lawsuits alleging unlawful boycotts can face a high bar.
X must show that there was an actual agreement to boycott joined by each advertiser, Bartholomew said. “Proving this requirement is no small hurdle” in cases where an agreement might be implicit, she said.
Even if the case succeeds, X cannot force companies to spend ad revenue on the platform, Bartholomew said.
The case was filed in the Northern District of Texas and assigned to U.S. District Judge Reed O’Connor. The district has become a favored destination for conservatives suing to block Biden administration policies.
X said in its lawsuit that it has applied brand-safety standards that are comparable to those of its competitors and that “meet or exceed” measures specified by the Global Alliance for Responsible Media.
The lawsuit said X has become a “less effective competitor” in the sale of digital advertising.
X is seeking unspecified damages and a court order against any continued efforts to conspire to withhold ad dollars.
Video-sharing company Rumble on Tuesday filed a separate antitrust lawsuit against the World Federation of Advertisers.
