X has filed an antitrust lawsuit against the World Federation of Advertisers, Unilever, CVS Health, Mars and Orsted. The motivation for this case comes from X claiming that the defendants unlawfully conspired to boycott the social media platform, which in turn cost them billions in lost ad revenue.
The lawsuit alleges that these advertisers have gone against US antitrust laws, by acting against their own financial self-interest, and unlawfully withholding ad revenue. As a result, X wants damages paid, as well as a court order to stop the conspiracy to withhold these funds.
Why Did The Advertisers Boycott?
The motivation behind the boycott stems from the Global Alliance for Responsible Media’s intention to address illegal and harmful content put out on social media platforms, through the monetisation of ads.
When Musk acquired the X app a couple of years ago, advertisers were concerned about how the platform adheres to brand safety standards, as they feared that their brands would appear together with said harmful content due to the new policies and visions for the platform.
As a result, the GARM and its members decided to withhold ad revenue from X. The major brands like Unilever participated in this boycott as well.
Where Does GARM Stand?
GARM introduced the Brand Safety Floor and Suitability Framework as a way to promote safer online spaces for users and brands alike. Members agreed to these standards, and expected platforms like x to comply. GARM stands by its actions, as they believe they are helping brands in being placed with more appropriate content, which they argue serves their best interests.
In 2020, GARM had done something similar by pushing social media platforms to follow its guidelines, and that resulted in adjustment made by these platforms.
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What Did X Say In Response?
X’s Chief Executive, Linda Yaccarino, argued that X had surpassed the advertisers’ requests for brand safety, saying, “We have proven our platform provides advertisers a way to showcase their brands and reach their target audiences safely, efficiently, and effectively.”
Musk publicly declared “war” on the advertisers on his app, claiming, “We tried being nice for 2 years and got nothing but empty words. Now, it is war.”
What Are Industry Experts Saying?
Christine Bartholomew, an antitrust expert at the University of Buffalo’s law school spoke on the difficulty in proving unlawful boycotts, saying, “Proving this requirement is no small hurdle.”
X needs to prove that the advertisers did agree to the boycott, and that they conspired to withhold the ad revenue from the app. If X succeeds with this case, it may change how advertising alliances work, and how they go about applying brand safety standards. On the other hand, a ruling in favour of the advertisers could affirm their right to choose where to allocate their budgets based on their brand safety requirements.
The battle between X and the advertisers has forced X to reevaluate its business strategies. Since the boycott began, the platform has faced a reduction in ad revenue, forcing X to pivot its focus toward smaller businesses and alternative monetisation methods.
Should X convince advertisers that it has brands’ interests at heart, it might regain lost ground, and bring in new partnerships with major brands.
