It’s war now, says Elon Musk as X sues advertisers for boycott

Elon Musk’s Company X has filed a lawsuit against several high-profile advertisers, accusing them of violating antitrust laws. The lawsuit, which claims the advertisers organized a “boycott” that severely damaged X’s revenue stream, is a significant moment in Musk’s ongoing feud with the ad industry. Here’s everything you need to know.

The lawsuit alleges that a powerful advertising coalition, the Global Alliance for Responsible Media (GARM), made a group effort to withhold billions of dollars in ads from X Corp. The move was allegedly prompted by concerns about the platform’s compliance with brand safety standards following Musk’s acquisition of X in late 2022. GARM, a voluntary initiative of the World Federation of Advertisers, aims to ensure that brands don’t place their ads next to illegal or harmful content.

The lawsuit specifically names four defendants out of more than 100 GARM member companies: CVS, Unilever, Mars and Danish energy giant ˜rsted. Filed in a Texas federal court, the lawsuit highlights X Corp.’s struggles to revive its core advertising business, which has waned since Musk took it over. Many advertisers have cut back on spending, fearing their ads would be associated with disinformation or hate speech on the platform.

X Corp executives have delivered mixed messages about the state of their advertising business, alternately claiming recovery and acknowledging ongoing difficulties. In a video message on X, CEO Linda Yaccarino painted a grim picture, warning that the GARM-led boycott threatens the platform’s long-term viability by significantly cutting into its ad revenue.

GARM has yet to comment on the lawsuit. According to X Corp’s legal complaint, GARM members collectively agree to uphold and enforce brand safety standards, halting advertising on platforms that don’t adhere to them. After Musk’s takeover, GARM publicly pressured X Corp to meet those standards, prompting many of its member companies to abruptly stop or limit advertising on X.

GARM’s official position, as stated on its website, is that it “does not interfere with a member’s decision to invest advertising inventory in a particular website or channel.” Nevertheless, X Corp’s lawsuit seeks to prevent GARM from making such recommendations regarding advertising on X, and also seeks unspecified monetary damages.

In a similar move, X Corp also filed a lawsuit against watchdog group Media Matters. The legal action follows a Media Matters analysis that shed light on anti-Semitic and pro-Nazi content on X, which prompted a significant backlash from advertisers. X Corp’s lawsuit claims that Media Matters misrepresented the likelihood of ads running next to such extremist content. Media Matters CEO Angelo Carusone dismissed the lawsuit as “frivolous,” and the case is set to go to trial next year.

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