Elon Musk’s social media company X sued advertisers over a “massive advertiser boycott,” which resulted in a loss of billions of revenue dollars and violated antitrust law.
The Lawsuit Filing
The lawsuit was filed Tuesday in Texas against the World Federation of Advertisers, and member companies Unilever, Mars, CVS Health, and Orsted were listed in the suit.
Allegations Against the Global Alliance for Responsible Media
X’s lawsuit alleges that the Global Alliance for Responsible Media facilitated a boycott of advertising on X when Musk bought the company formerly called Twitter in 2022.
Musk’s Acquisition and Company Restructuring
Musk purchased Twitter for $44 billion and soon restructured the company, hired new staff, and implemented new policies, specifically those related to free speech.
Opposition and Financial Impact
Many who opposed Musk’s politics attempted to stymie his intentions to shift the company. Amidst the dramatic showdown, the company lost billions in advertising revenue.
Musk’s Declaration of Legal Action
Two years later, Musk announced the lawsuit, saying, “Now it is war” after “getting nothing but empty words.”
Statements from X CEO Linda Yaccarino
In a video announcement, X CEO Linda Yaccarino stated that the lawsuit is based on evidence that emerged during a congressional investigation in the U.S. House Judiciary Committee, suggesting that “a group of companies organized a systematic, illegal boycott” against Musk’s acquisition.
Congressional Hearing and Revelations
The revelation occurred during a July hearing on whether the laws in place are sufficient “to deter anti competitive collusion in online advertising.”
Testimony from Unilever Representative
A Unilever representative testified before the House Judiciary Committee as part of the hearing, claiming that the company chooses to put advertisements on websites and platforms that will not harm its brand.
Unilever’s Stance on Advertising
Unilever President Herrish Patel told the Committee, “Unilever, and Unilever alone, control our advertising spending. No platform has a right to our advertising dollar.”
Suspension of GARM Initiative
Following Tuesday’s lawsuit filing, the World Federation of Advertisers suspended its Global Alliance for Responsible Media (GARM) initiative.
Purpose and Irony of GARM
GARM was initially created in 2019 to help companies avoid potentially problematic alliances with platforms, influencers, and other factors that could harm the brand.
In this way, the GARM could be seen as a protection for brands against “cancel culture.” Ironically, though, the effect of the GARM decisions could potentially “Cancel” the medium for the advertisement—such as Twitter or X.
Legal Concerns and House Judiciary Committee’s View
In the legal filing, X’s legal team quoted concerns from the House Judiciary Committee that GARM’s decisions “rob consumers of choices” and are “likely illegal under the antitrust laws.”
Musk’s Accusations Against GARM
The House Judiciary Committee also revealed their belief that members of policing groups such as GARM illegally coordinate to “demonetize conservative platforms and voices.”
For years, Musk has accused GARM of “blackmail” by causing advertisers to pull their ads from the social media platform when he took over. He said, “The whole world will know those advertisers killed the company, and we will document it in great detail.”
