A new lawsuit by Elon Musk’s X has accused a group of major advertisers of conspiring to ‘boycott’ ad spending on the platform.
It is the Global Alliance for Responsible Media, a voluntary ad-industry initiative run by the World Federation of Advertisers that helps brands avoid having their ads appear next to illegal or harmful content.
The lawsuit reportedly alleges that the influential ad industry group had orchestrated “to collectively withhold billions of dollars in advertising from Twitter” since they were concerned that the platform had veered off brand safety standards once Musk took over in late 2022.
GARM has a roster of over 100 major advertisers, including CVS, Unilever, Mars, and the Danish energy company, among others.
Even taking to X, Musk said that they had been trying to win back advertisers for two months, but “now it is war.”
X’ CEO Linda Yaccarino published an open letter to the advertisers yesterday, announcing the company’s legal action against the group of advertisers.
“Last month, the U.S. House of Representatives Judiciary Committee’s report of investigation by its entitled GARM’s (Global Alliance for Responsible Media) Harm disclosed that its probe had uncovered evidence pointing to an illegal boycott against a host of companies, including X.”
“This behavior is a stain on a great industry, and it cannot be allowed to continue,” the letter says. “The illegal activities of these companies and their execs have cost X billions of dollars. I said from the time I arrived at X that I had made it my business to continue to build a platform where people, brands, and advertisers thrive in our unique, dynamic, safe environment. And today, because of this commitment to our users even despite the boycott, usage has reached all-time highs. Using a Twitter legacy metric, user active minutes, in August 2022, people spent 7.2 billion active minutes on the platform. Today, that number is north of 9 billion, a 25% increase. The same is true for video- even compared to last year, daily video views are up 45% to 8.2 billion. X is innovating and growing,” Yaccarino added.
It was as far back as 2022 that Musk acquired the social media platform; at the time, many advertisers paused ads on X, then Twitter, amid concerns that their ads might run alongside misinformation or hate speech. Since then, X has been trying to woo back advertisers onto the platform.
It was only some months ago that Musk told the advertisers boycotting the platform to basically “Go F*** yourselves” during a public event, having also singled out Disney CEO Bob Iger for not running ads on X.
“What this advertising boycott is going to do is it’s going to kill the company. That is what everybody on Earth will know. We’ll be gone, and it’ll be gone because of an advertiser boycott,” he had said.
According to several reports, X hauled up $1.48 billion in revenue in the first half of 2023, nearly down 40% from the same period in 2022, prior to Musk’s $44 billion buyout. Ad revenues of $456 million were lost by the company in the first quarter of 2023.
