On Tuesday, Elon Musk’s social media platform X initiated legal proceedings against a global advertising organization along with several prominent companies, including Mars and CVS Health. The lawsuit alleges that these entities engaged in unlawful collusion to boycott the platform, leading to significant revenue losses.
Filed in federal court in Texas, the lawsuit targets the World Federation of Advertisers, alongside Unilever, Danish renewable energy firm Orsted, and the aforementioned companies.
The complaint contends that these advertisers, as part of a World Federation of Advertisers initiative titled Global Alliance for Responsible Media, collectively withheld “billions of dollars in advertising revenue” from X, which was formerly known as Twitter.
According to the filing, the advertisers acted against their own financial interests and formed a conspiracy that contravenes U.S. antitrust legislation.
Requests for comment from the World Federation of Advertisers, Unilever, Mars, and CVS Health were not immediately answered. Orsted declined to provide a comment on Wednesday.
In light of the lawsuit, X’s CEO Linda Yaccarino remarked that “people are hurt when the marketplace of ideas is constricted. No small group of people should monopolise what gets monetised.”
Following Musk’s acquisition of the company in 2022, X experienced a considerable decline in advertising revenue, as various advertisers became hesitant to spend on the platform due to concerns regarding potential exposure to harmful content that had previously been moderated.
The responsible media initiative was launched by the advertising group in 2019, aimed at addressing the challenges posed by illegal or harmful content on digital platforms and the monetization of such content through advertising.
Christine Bartholomew, an antitrust specialist and law professor at the University at Buffalo, noted in comments to Reuters that legal claims of unlawful boycotts often face rigorous challenges.
Bartholomew explained that X must demonstrate that a clear agreement to boycott was made, with corroboration from each advertiser. Proving this requirement can be complex, especially in cases where the agreement might be implicit.
Even if X succeeds in its lawsuit, Bartholomew highlighted that the platform cannot compel companies to allocate advertising spending towards it.
The case has been lodged in the Northern District of Texas and will be overseen by U.S. District Judge Reed O’Connor, a venue known for being favorable to conservative litigants seeking to contest Biden administration policies.
X asserts in its lawsuit that it has implemented brand-safety standards equivalent to, or surpassing, those set by the Global Alliance for Responsible Media.
The lawsuit further claims that X has become a “less effective competitor” in the digital advertising market.
X is pursuing unspecified damages and seeks a court injunction against any ongoing actions to conspire against the platform’s ad revenue.
In a separate development, video-sharing platform Rumble filed an antitrust lawsuit against the World Federation of Advertisers on the same day.
© Thomson Reuters 2024
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