X today filed a lawsuit against a group of major advertisers for allegedly conspiring to withhold advertising dollars from the social media platform, which, since Elon Musk’s takeover, has been seen as more amenable to hosting controversial content.
The suit, filed in federal court in Texas, says dozens of advertisers followed the recommendation of a key advertising coalition, Global Alliance for Responsible Media (GARM), to boycott buying ads on X since Musk bought the company. The suit says this turn of events cost the company billions of dollars in revenue. The lawsuit seeks unspecified damages for violation of US antitrust law.
The right-wing video site Rumble, founded more than 10 years ago as an alternative to YouTube and positioned as a platform “immune to cancel culture,” announced on Tuesday that it had filed a similar lawsuit. “GARM was a conspiracy to perpetrate an advertiser boycott of Rumble and others, and that’s illegal,” the company posted on its X account.
The US House Judiciary Committee, which is controlled by Republicans and has expressed concern about censorship of right-wing views on social media, has been investigating GARM. In a preliminary report in July, the committee found that “the extent to which GARM has organized its trade association and coordinates actions that rob consumers of choices is likely illegal under the antitrust laws and threatens fundamental American freedoms.” X’s lawsuit draws heavily from internal GARM emails reviewed by the congressional panel.
In a video shared to X, X CEO Linda Yaccarino said she was “shocked” by the evidence uncovered by the House Judiciary Committee that there had been a “systematic illegal boycott against X.” Yaccarino attempted to rally X users with references to free speech in her statement. While pointing directly at the camera, she alleged that the advertisers were “targeting our company, and you, our users,” and “threatening your global town square.”
“People are hurt when the marketplace of ideas is constricted,” Yaccarino said.
The Brussels-based World Federation of Advertisers, which oversees GARM, did not immediately respond to a request for comment on the lawsuits. X’s lawsuit also names Unilever, Mars, CVS, and a Danish energy company as defendants, while Rumble’s suit additionally targets the ad agency WPP. None of the companies immediately responded to requests for comment.
X’s lawsuit contends that advertisers in the past had to individually strike deals with social media companies to set boundaries around what types of content they would sponsor. Through GARM, advertisers have been able to aggregate their power, establish industry standards for content moderation, and enforce them. In X’s view, GARM now has too much say over the content social media platforms may allow.
“In a competitive market, each social media platform would set the brand safety standards that are optimal for that platform and for its users, and advertisers would unilaterally select the platforms on which they advertise,” the complaint states. “But collective action among competing advertisers to dictate brand safety standards to be applied by social media platforms shortcuts the competitive process and allows the collective views of a group of advertisers with market power to override the interests of consumers.”
X’s fraught relationship with advertisers dates back as far as Musk’s buyout of the company formerly known as Twitter. The new lawsuit alleges that GARM, via a public letter to Musk, triggered a boycott of Twitter ads immediately following his purchase of the company in October 2022. Over the next two months, at least 18 GARM-member advertisers, including Mars and Unilever, stopped buying Twitter ads, according to the lawsuit. Dozens more members cut back their spending.
In November 2023, the nonprofit media watchdog Media Matters published a report that showed how pro-Nazi content on X had been appearing alongside advertising from reputable brands. As a result, entities like IBM, Disney, Lionsgate, the European Union, and, reportedly, Apple, pulled their ads from X. Later that month, speaking at the New York Times DealBook Summit, Musk told those brands “Go fuck yourself,” and aimed some of his remarks specifically at “Bob,” Disney’s chief executive, Bob Iger.
X alleges that GARM has yet to rescind its boycott. “By refraining from purchasing advertising from X, boycotting advertisers are forgoing a valuable opportunity to purchase low-priced advertising inventory on a platform with brand safety that meets or exceeds industry standards,” the complaint states.
In a preview of advertisers’ potential defense to the new lawsuits, Sarah Kay Wiley, director of policy at the advertising watchdog group Check My Ads, says in an emailed statement that advertisers have a right under the First Amendment to choose with whom and what they want to associate.
“Advertisers should not have to subsidize viewpoints they don’t agree with—in fact requiring so would be un-American and unconstitutional,” Wiley writes. “Elon Musk and X executives have the right, protected by the First Amendment, to say what they want online, even when it’s inaccurate, and advertisers have the right to keep their ads away from it. It’s as simple as that.”
Alleging unfair competition isn’t a new tactic for smaller social media companies. In May, Rumble sued Google’s advertising business also alleging antitrust violations. Google last week filed a motion to dismiss the complaint on the basis that Rumble lacked standing to sue because it wasn’t using or competing with Google’s offerings. “Rumble does not belong in the current melee over Google’s advertising technology,” Google’s attorneys wrote. A hearing is scheduled for January.
Source : Wired
