X Sues Advertising Coalition, GARM for “Boycotting” the Platform
Elon Musk has filed a lawsuit against GARM, a coalition of major advertisers, accusing them of conspiring with brands to dissuade them from spending money on X. Learn more about the lawsuit and who else is supporting it.
- X has filed an antitrust lawsuit against the Global Alliance for Responsible Media and a few other companies.
- Since taking charge of the popular social media platform, Elon Musk has been engaged in a battle of sorts with advertisers.
The popular social media platform X has filed an antitrust suit against the Global Alliance for Responsible Media (GARM), a coalition of major advertisers. The lawsuit claimed that the alliance violated antitrust laws by coordinating with brands to dissuade them from spending money on the Elon Musk-owned platform.
The lawsuit was filed in a federal court in Texas. It accused GARM of conspiring with leading brands, such as Unilever, CVS, Danish renewable energy company Orsted, and Mars, to withhold billions of dollars of ad revenue owed to X (formerly Twitter) after Musk’s taking over the company in 2022.
In an open letter to advertisers, Linda Yaccarino, X’s chief executive, wrote, “The illegal behavior of these organizations and their executives cost X billions of dollars. People are hurt when the marketplace of ideas is undermined, and some viewpoints are not funded over others as part of an illegal boycott.”
A Message to X Users pic.x.com/6bZOYPhWVa
— Linda Yaccarino (@lindayaX) August 6, 2024
Musk, too, openly declared war on advertisers with his post, which read, “We tried being nice for 2 years and got nothing but empty words. Now, it is war.” He also encouraged any company that faced such a boycott to file a lawsuit.
However, legal experts have doubted the lawsuit’s success. For example, Christine Bartholomew, an antitrust expert and professor at the University at Buffalo’s Law School, said that the company would have to show an actual agreement to boycott joined by each advertiser. Further, even if the case succeeds, Musk cannot force businesses to spend advertising revenue on X.
X Engaged in a “Battle” With Advertisers Since Musk’s Takeover
Musk has had a turbulent relationship with X’s advertisers since he took over the company. Since he acquired the company and promised a new era of free speech, several advertisers limited their spending on the platform, worried by reports of a rise in misinformation and hate speech. Several brands also left the platform or limited spending after Musk restored several banned accounts.
X also allowed its GARM membership to lapse after Musk’s takeover but recommitted to the coalition in July this year.
According to the suit, GARM, representing some major brands responsible for over 90% of global advertising spending, encouraged advertisers to avoid the platform following Musk’s takeover. Further, 18 GARM members stopped advertising on the platform. The filing also said many others reduced spending by at least 70%.
In addition to these incidents, Musk has accused advertisers of blackmailing him several times by pulling their advertising from the platform.
All these incidents have severely affected X’s revenues. During Q2 2024, X earned a revenue of $114 million in the US, a 25% decline from Q1 and a 53% decline from the same period last year. The company aims to achieve $190 million in US revenue in Q3 this year through Olympics, football, and political campaign-related advertising.
The suit further said the company was forced to drop its ad prices. Despite this, advertisers didn’t return to the platform. X argued that advertisers’ refusal to return was anti-competitive.
See more: X Is Quietly Training Grok With Your Posts, Here’s How You Can Opt Out
Rumble Joins the Fray
Rumble, a video-sharing platform and cloud services provider, has joined X to file antitrust lawsuits against the World Federation of Advertisers (WFA), which is the founder of GARM, as well as the advertising agency WPP and its subsidiary GroupM Worldwide. The lawsuit alleged the coalitions of a conspiracy to withhold advertising from the service and many other digital media platforms.
In its filing, the company said, “The brand safety standards set by advertisers and their ad agencies should succeed or fail in the marketplace on their own merits and not through the coercive exercise of market power. All of this illegal conduct is done at the expense of platforms, content creators, and their users, as well as the agencies’ advertiser clients who pay more for ads as a result of their collusion.”
The WFA and other companies accused haven’t yet made a public statement regarding the lawsuit.
MORE TECHNOLOGY NEWS
US Judge Rules Google Has an Internet Search Monopoly
Apple Brings Distraction Control To Safari To Improve Web Browsing
Intel Cuts Over 18,000 Jobs Following Troubling Quarterly Earnings Report
