Elon Musk's X expands lawsuit against advertisers over alleged boycott
What's the story
Elon Musk's company X has widened its legal battle against a number of major advertisers. The firm claims that these companies conspired to boycott advertising on its platform after Musk took over. Nestle, Abbott Laboratories, Lego, Colgate, Pinterest, Tyson Foods and Shell have now been added as defendants in the lawsuit. This comes after an amended complaint was filed in a Texas court yesterday.
Conspiracy claim
X alleges illegal conspiracy to withhold ad revenue
In its lawsuit, X claims that members of the now-defunct Global Alliance for Responsible Media (GARM)—an advertiser trade body project of the World Federation of Advertisers (WFA)—illegally conspired to "collectively withhold billions of dollars in advertising revenue" from X. The WFA, CVS Health, Mars, Orsted and Twitch are also named as defendants in this case. However, the WFA has declined to comment on these allegations.
Brand safety
GARM's role and impact on X's competitiveness
Founded in 2019, GARM was a US-based initiative that sought to offer common frameworks for media owners, advertisers as well as agencies to classify harmful content. Many online platforms and agencies voluntarily adopted these frameworks as a "brand safety floor." X claims that the WFA "organized an advertiser boycott of Twitter through GARM" to coerce Twitter into complying with the GARM Brand Safety Standards.
Legal recourse
X seeks damages for alleged antitrust violations
X's lawsuit alleges that at least 18 members of GARM stopped advertising on X in the US or globally between November and December 2022. The company is demanding "trebled compensatory damages" and injunctive relief for what it claims are violations of US antitrust laws. This lawsuit follows Twitter's ad revenue taking a hit after Musk's acquisition, with many advertisers shying away from the platform due to controversial policy changes.