Elon Musk’s company, X, has taken legal action against several major companies for allegedly conspiring to boycott advertising on the platform, leading to a significant loss in revenue. The lawsuit, filed in Texas, names the World Federation of Advertisers and member companies Unilever, Mars, CVS Health, and Orsted as defendants.
This legal battle stems from a decline in advertising revenue on X after Musk acquired and rebranded the social network for billions of dollars. Following the takeover, Musk laid off thousands of employees, ceased moderation efforts, and faced criticism for allowing hate speech and misinformation to spread on the platform.
The lawsuit claims that the advertisers violated US anti-trust laws by colluding to withhold advertising spending through the Global Alliance for Responsible Media (GARM) initiative. X is seeking damages and a court order to prevent further attempts to restrict advertising.
X’s CEO, Linda Yaccarino, emphasized the importance of a diverse marketplace of ideas and criticized any attempts to monopolize advertising opportunities. Despite the legal action, experts suggest that X will face challenges in proving the alleged boycott agreement and cannot compel companies to advertise on the platform.
While the accused companies have not responded to the lawsuit, Unilever stated in a congressional hearing that it only advertises on platforms that align with its brand values and does not feel obligated to spend advertising dollars on any specific platform.
The outcome of this legal battle between X and major advertisers will have significant implications for the tech industry and the regulation of digital media platforms. It raises questions about the power dynamics between tech giants and advertisers, as well as the responsibility of platforms to moderate content and protect users from harmful information. As the case unfolds, the tech industry and regulatory bodies will closely monitor the developments and potential precedents set by this lawsuit.