Elon Musk’s social media platform X on Tuesday sued a global advertising alliance and several major companies including Mars and CVS Health, accusing the companies of conspiring to boycott the site and causing revenue losses.
X filed the lawsuit in federal court in Texas against the World Federation of Advertisers, Unilever and Danish renewable energy company Orsted, in addition to Mars and CVS Health.
The lawsuit alleges that advertisers, acting through an initiative of the World Federation of Advertisers called the Global Alliance for Responsible Media, collectively withheld “billions of dollars in advertising revenue” from X, formerly known as Twitter.
It was said that they acted against their own economic interests in a conspiracy against the platform, which violated US competition laws.
The World Federation of Advertisers, Unilever, Mars and CVS Health did not immediately respond to requests for comment. Orsted declined to comment Wednesday.
In a statement Tuesday about the lawsuit, X CEO Linda Yaccarino said that “people get hurt when the marketplace of ideas is limited. No small group of people should be able to monopolize what gets monetized.”
Ad revenue at X declined for months after Musk bought the company in 2022. Some advertisers were wary of ad spending under Musk amid questions and fears that their brands would appear next to harmful content that might have been removed under previous owners.
The advertising group launched the Responsible Media Initiative in 2019 to “help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization through advertising.”
Christine Bartholomew, an anti-monopoly expert and professor at the University at Buffalo law school, told Reuters that the bar can be high for lawsuits alleging unlawful boycotts.
X must show that there was an actual agreement to boycott, which each advertiser signed on to, Bartholomew said. “Proving this requirement is no small hurdle” in cases where an agreement might be implied, she said.
Even if the case is successful, X cannot force companies to spend advertising revenue on the platform, Bartholomew said.
The case was filed in the Northern District of Texas and assigned to U.S. District Judge Reed O’Connor. The district has become a favorite destination for conservatives suing to block Biden administration policies.
X argued in its lawsuit that it has brand safety standards that are comparable to those of its competitors and that “meet or exceed” measures specified by the Global Alliance for Responsible Media.
The lawsuit alleged that X has become a “less effective competitor” in the sale of digital advertising.
X is seeking unspecified damages and an injunction against all continued attempts to withhold advertising revenue.
Video platform Rumble filed a separate antitrust lawsuit against the World Federation of Advertisers on Tuesday.
© Thomson Reuters 2024
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