One of the leading business tycoons, Elon Musk, has initiated legal action against several major corporations, including Unilever and Mars, accusing them of participating in an unlawful “boycott” of his social media platform, X (formerly known as Twitter).
The lawsuit, filed in a Texas court, also targets the private healthcare company CVS Health, renewable energy firm Orsted, and the World Federation of Advertisers (WFA) trade association. In the complaint, X asserts that these companies have deprived it of “billions of dollars” in potential revenue due to their actions.
X’s Revenue Decline and Its Effects on Crypto Advertising
The roots of this lawsuit can be traced back to 2022, shortly after Musk acquired X. Following his takeover, advertising revenue plummeted significantly, leading to concerns among advertisers about the platform’s safety for their brands. Critics raised points about Musk’s commitment to regulating harmful content, causing several companies to reconsider their advertising strategies on the platform. Over the following year, it was reported that X’s advertising revenue had decreased by more than 50%.
Linda Yaccarino, the CEO of X, emphasised the detrimental impact of such a boycott on free expression, stating, “People are hurt when the marketplace of ideas is constricted. No small group of people should monopolise what gets monetized.” Yaccarino voiced concerns that the alleged actions of these companies posed a threat to X’s future viability and growth.
Christine Bartholomew’s Analysis of Elon Musk Lawsuit’s Legal Hurdles
In a public statement on social media, Musk conveyed his frustration, saying, “We tried being nice for 2 years and got nothing but empty words. Now, it is war.” This remark shows the heated tension between the platform and its former advertisers. However, as of now, the WFA and the companies named in the lawsuit have yet to respond to any inquiries regarding the case.
Experts in legal matters suggest that the Elon Musk lawsuit may face significant challenges, as it will be difficult to prove any collusion or agreement among the companies involved. Bill Baer, who previously served as the assistant attorney general in charge of the Department of Justice’s antitrust division, noted, “As a general rule, a politically motivated boycott is not an antitrust violation. It is protected speech under our First Amendment.” Similarly, Christine Bartholomew, an antitrust expert and professor at the University at Buffalo’s law school, stated that for the lawsuit to hold, X would need to demonstrate that there was a concrete agreement among each advertiser to join the boycott, which she emphasised would be a substantial obstacle.
Antitrust Concerns: Can X Prove Violations in Its Lawsuit?
Even if X were to find success in court, it is important to note that the platform cannot force advertisers to allocate their budgets toward it. In its pursuit of damages, X is seeking unspecified amounts along with a judicial order to prevent any ongoing efforts that conspire to limit advertising expenditure on the platform.
The lawsuit centres around allegations that the accused companies unjustly withheld advertising dollars based on the safety standards established under the WFA’s Global Alliance for Responsible Media (GARM) initiative. According to X, the goal of GARM is to aid the industry in tackling the issues presented by illegal or harmful content on digital platforms, alongside the monetization of such content via advertisements. X contends that the companies acted against their own economic interests in forming what it claims is a conspiracy that violates US antitrust law.
Lawsuit Against WFA Mirrors X’s Claims
Rebecca Haw Allensworth, a law professor at Vanderbilt University, pointed out that the boycott is more about making a statement on X’s policies and branding. She asserted that such actions fall under the protections guaranteed by the First Amendment. In its legal complaint, X also emphasises that it has adopted brand-safety standards that are on par with its competitors and either meet or exceed those outlined by GARM.
The lawsuit claims that as a result of the alleged boycott, X has become a “less effective competitor” in the digital advertising market. In a related context, video-sharing platform Rumble, preferred by right-wing influencers, has recently filed its own lawsuit against the WFA, making parallel claims regarding advertising practices and policies. Stay tuned for more updates on this evolving story on the Turkish NY Radio.
