In context: Remember last year when Elon Musk sued some of the advertisers who left X, alleging it was part of a coordinated boycott of the site that broke federal antitrust laws? That lawsuit is ongoing, and it has now been broadened to add more brands, including Lego, Nestlé, and Pinterest.
In November 2023, IBM suspended its advertising on X after a report said one of its ads appeared next to posts that promoted Hitler and the Nazi party. More companies later suspended their advertising on the platform, including Disney. It led to X filing a lawsuit in Texas against the World Federation of Advertisers (WFA) and its Global Alliance for Responsible Media (GARM) initiative, in which the WFA and member companies are accused of violating antitrust laws.
On Saturday, X added Lego, Nestlé, Tyson Foods, Abbott Laboratories, Colgate-Palmolive, Pinterest, and Shell International as defendants in the suit.
The lawsuit alleges that the defendants conspired to collectively withhold billions in advertising revenue following Musk's takeover of Twitter in 2022. It named CVS, Mars, Ørsted, and Twitch, which was added later, specifically. Unilever had also been named but was dropped after the two companies reached an agreement.
According to the complaint, the WFA organized an advertiser boycott of Twitter/X through GARM with the goal of "coercing the platform to comply with the GARM Brand Safety Standards to the satisfaction of GARM."
We tried being nice for 2 years and got nothing but empty words.
– Elon Musk (@elonmusk) August 6, 2024
Now, it is war. https://t.co/MEzH0vqz0p
GARM was launched in 2019 to help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization via advertising.
GARM members agree "to adopt, implement, and enforce GARM's brand safety standards, including by withholding advertising from social media platforms deemed by GARM to be non-compliant with the brand safety standards," the lawsuit states. It alleges that members discontinued or sharply curtailed their ad spending on X after Musk took over.
The WFA discontinued GARM shortly after the lawsuit was filed. The organization wrote that "recent allegations that unfortunately misconstrue its purpose and activities have caused a distraction and significantly drained its resources and finances."
The suit also claims that member companies celebrated when X did not meet its forecasted revenue goals, and that the boycott continues today despite X meeting or exceeding standards set by GARM. It's claimed that ad prices on X remain well below those charged by its closest social media competitors, so "by refraining from purchasing advertising from X, boycotting advertisers are forgoing a valuable opportunity to purchase low-priced advertising inventory on a platform with brand safety that meets or exceeds industry standards."
Musk responded to the advertisers' exodus by telling the brands to "Go f**k yourself" during an interview at The New York Times Dealbook Summit. He later claimed this was about freedom of speech.
Watch my conversation with @ElonMusk: https://t.co/YedkELVhFn
– Andrew Ross Sorkin (@andrewrsorkin) November 29, 2023
X has recently seen several brands increase their advertising spending or return to the site, likely a result of Musk's close ties with the Trump administration. However, the world's richest man reportedly told X employees in January that "user growth is stagnant, revenue is unimpressive, and we're barely breaking even."
Elon Musk's X expands lawsuit against advertisers to include Lego, Pinterest, and other major brands