Elon Musk’s X Expands Lawsuit Against Advertisers Over Alleged Boycott
Elon Musk’s social media platform X has intensified its legal battle against major corporations, alleging that they engaged in an illegal conspiracy to boycott advertising on the platform. In an amended complaint filed on Saturday, Musk’s legal team expanded its initial 2024 lawsuit, which originally targeted the Global Alliance for Responsible Media (GARM) and several major advertisers, accusing them of violating antitrust laws.
The lawsuit claims that a group of advertisers, which include Nestlé, Abbott Laboratories, Colgate-Palmolive, Lego, Pinterest, Tyson Foods, and Shell International, collectively withdrew billions of dollars in advertising revenue, effectively punishing X after Musk’s acquisition of the platform, formerly known as Twitter, in 2022. These companies join an already extensive list of defendants that include CVS, Mars, Ørsted, and Twitch.
According to Musk’s legal team, this alleged boycott continues to affect X, despite the platform implementing content moderation and advertising policies that, they argue, meet or even exceed the standards dictated by GARM. The lawsuit challenges the collective action of advertisers, claiming that it undermines competition by allowing a group of powerful corporations to dictate the terms of brand safety policies rather than letting individual advertisers make independent decisions.
“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,” the complaint states.
Since Musk’s acquisition, X has undergone significant transformations, including major layoffs, relaxed content moderation policies, and the reinstatement of previously banned accounts, including that of former U.S. President Donald Trump. These changes have led to increased scrutiny from advertisers, many of whom fear that X’s more lenient approach to content could lead to brand association with controversial or harmful material.
As a result, X’s relations with advertisers have been tense. With such ongoing issues, X CEO Linda Yaccarino, in the past, had mailed an open letter to its advertisers by underlining the efforts of the platform in providing fair and safe advertising environment. However, this legal action indicates that the row between X and leading advertisers has worsened.
The following companies haven’t made a public statement about the lawsuit so far: Nestlé, Abbott Laboratories, Colgate-Palmolive, Lego, Pinterest, Tyson Foods, and Shell International. A decision by the court in favor of X will likely have huge ramifications for the advertising industry and how corporations will continue to collaborate on ad policies and brand safety measures.
This lawsuit serves to illustrate some of the more widespread problems Musk has had in reshaping X into a profitable, competitive social media entity. After all, following Musk’s acquisition, X could not regain its position among the advertising trust as companies started transferring their budgets towards alternative platforms, like Meta and Google, for whose brand safety measures align much more closely with the industry.
This is one of the most important cases in a while, one that may be watched closely by legal experts, media firms, and advertisers, since it raises basic questions as to what lines should be drawn between competitive advertising decisions and potential anti-competitive behavior. If X succeeds, it will set the stage for a future limit on the ability of industry groups to coordinate collective advertising decisions in ways that force brands to rethink their approach towards ad placements on social media platforms.
Though these are the challenges, Musk has continued to push forward with ambitious plans for X, including new monetization strategies, AI-driven content curation, and expanded video features. However, without the support of major advertisers, the platform faces an uphill battle in maintaining profitability and sustaining its user base.
The decision will, as the court rules, shape not only X’s financial future but also the legal precedent on collective industry action in digital advertising. Whichever side the court favors, be it X or the advertisers, this case might be the new norm for social media platforms and advertisers in the new digital frontier.
