In Bid for Ads, Elon Musk’s X Declares Legal War on … Advertisers

Escalating hostility with major advertisers, X has sued a coalition representing big-money brands for allegedly coordinating a boycott of the platform in violation of antitrust laws.

The proposed class action, filed in federal court in Texas on Tuesday, accuses the World Federation of Advertisers of conspiring with companies to withhold advertising on X due to relaxed safety standards since Elon Musk assumed control of platform in 2022. In the wake of the takeover, 18 firms stopped ad campaigns with the platform and dozens more slashed spending, in several cases by over 70 percent, in a bid to coerce X into implementing favored policies, according to the complaint.

“The illegal behavior of these organizations and their executives cost X billions of dollars,” wrote X chief executive Linda Yaccarino in an open letter to advertisers. “People are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott.”

In a post on X, Musk urged others to join the lawsuit. “We tried being nice for 2 years and got nothing but empty words,” he wrote. “Now, it is war.”

The companies named in the lawsuit, which include CVS, Unilever and Mars, are members of the World Federation of Advertisers. In 2019, the group established an initiative called the Global Alliance for Responsible for Media to pursue safety guardrails on social media platforms. It’s largely concerned over advertisements appearing next to illegal or harmful content, such as child pornography or hate speech.

Following Musk’s acquisition of X, the lawsuit claims the group organized an advertiser boycott by issuing public statements of its concerns, with the goal of strongarming the platform into complying with certain safety standards. That year, WFA issued a public letter to Musk to “uphold existing commitments on brand safety and deepen future collaboration.”

After he purchased the site, Musk immediately moved to steer the company toward his free speech ideals. This included reinstating banned accounts, such as those from Kanye West and Donald Trump, and launching a new paid verification system that allowed some users to impersonate brands. A high-profile incident in November 2022 saw an account using the name and logo of Eli Lilly state, “We are excited to announce insulin is free now.” The post was a fake, sparking a panic at the pharmaceutical giant that led to the halting of all ad campaigns with the platform.

In the complaint, X alleges GARM’s advertising agency members recommended to their clients that they suspend advertising, with some saying that they considered it “high risk.” Following the alleged boycott, X fell 80 percent below revenue forecasts,  the lawsuit says.

“Mars, Ørsted, Unilever U.S., CVS Health, and the other GARM-member advertisers discontinued or curtailed their purchases of advertising knowing as a result of communications facilitated by and through WFA that other GARM-member advertisers and advertising agencies would do the same,” states the complaint, which notes that candy company hasn’t purchased domestic ads on X since October 2022.

X maintains that its safety standards exceed industry norms. It says that GARM refuses to rescind recommendations not to refrain from advertising on the platform despite more than 99 percent of its ad placements over the past two years appeared next to content that the group finds satisfactory. This, in turn, had forced the company to decrease ad prices “well below those charged by X’s closest competitors in the social media advertising market,” the lawsuit claims.

The complaint brings a claim for a violation for section one of the Sherman Act, which bars restraint on trade.

The filing of the lawsuit follows spats between Musk and some of X’s major advertisers. Last year, he accused brands of trying to blackmail him after they pulled their advertising following his endorsements of an antisemitic conspiracy theory. He named Disney chief executive Bob Iger, who said “the association with that position, and Elon Musk, and X was not necessarily a positive one for us.”

In July, the House Judiciary Committee issued a report accusing GARM of “attempting to influence what content appears online by starving disfavored” platforms of advertising dollars.