Why Elon Musk’s X filed an antitrust lawsuit against advertisers

Guys, is it illegal for brands to refuse to advertise on my social media sites? If you’re Elon Musk, the answer is yes.

This week, Musk’s social media company X (formerly Twitter) filed a Eye-popping lawsuit The suit, filed by advertising industry groups and several large brands, including Unilever (maker of Dove soap), Mars (maker of a variety of candies) and CVS, alleges that the companies’ combined boycotts not only caused “huge economic damages” but also violated antitrust laws because they colluded to specifically target a company and make it less competitive in selling digital ads.

since Have to buy In 2022, Musk tried to turn the site into a haven for unfettered speech, but critics debate The website often called “Hell Site” It had become an unusable cesspool long before Musk’s time. alum and Incoherent porn robotAdvertisers are fleeing as companies do not want to risk having their ads appear on websites that are offensive or downright offensive. Illegal Contentlike Child sexual abuse materialThis is terrible for X because, like other social media companies, it would go bankrupt without ad revenue. X argues that the suspension is a “naked restraint of trade” because advertisers are collectively forcing the site to abide by their content standards. It has even had to lower its ad prices, the complaint says.

The lawsuit places much of the blame on Global Alliance for Responsible Media (GARM), an initiative launched in 2019 to establish brand safety standards for advertising platforms. GARM membership information is listed on the website As of August 6including consumer brands, ad agencies and media companies that deliver advertising (such as Spotify and more recently X), asking them to commit to making decisions on what constitutes Harmful or risky content Membership is voluntary, and GARM said individual advertisers ultimately decide how and where to place ads. It did not respond to a request for comment. Days after the lawsuit was filed, Stephan Loerke, CEO of the World Federation of Advertisers, the large advertising industry association to which GARM belongs, told members that GARM would shut down, according to an email. Business InsiderThe group denied any wrongdoing but noted Limited financial resources However, Locke made it clear that he believes GARM will be vindicated in court.

But none of this stopped X from showing his Advertising revenue plummets This is a criminal injustice. X said in the lawsuit that at least 18 GARM members pulled all of X’s advertising by the end of 2022, while many more members drastically cut their spending. video In a post published on X, CEO Linda Yaccarino issued a strong appeal to X users, arguing that it was advertisers, not X’s chaotic management, that threatened the financial future of a major platform. “This puts your global town square — the only place where you can express your opinions freely and openly — at long-term risk,” she said, echoing X’s advocacy for uncensored free expression even as it moderates content and even when some say it Unclear policy.

X’s lawsuit was led by Republicans House Judiciary Committee Report and hearing GARM has made similar antitrust allegations, saying the group has financially stymied platforms that host content it doesn’t approve of. This is a continuation of a long-running debate about free speech and its consequences. You have the right to speak, but do you have the right to get rich by monetizing your speech? If X goes bankrupt by shutting off too many advertisers, who else but X should be blamed?

On X, House Judiciary Committee Republicans celebrated the news of GARM’s closure, calling it “A victory for the First Amendment“Yaccarino called The move was an “important acknowledgment” that “no small group should have a monopoly on monetizing anything.”

Spencer Weber Waller, Professor of Antitrust Law at Loyola University testify At the GARM hearing, he told Vox he was skeptical about the merits of the lawsuit. “Just because you’re angry about something doesn’t mean it’s illegal,” he said.

Musk has had a rocky relationship with X advertisers over the years. Here’s a quick recap: Musk took over in October 2022 and began laying off thousands of employees. The largest layoffs were Security Teaminclude Content Managersignaling to advertisers that brand safety will not be a priority under Musk’s leadership. Twitter’s old identity verification system, which gave verified public figures and official brand accounts a blue checkmark, has been removed, unsurprisingly sparking a wave of online trolls Impersonating a celebrity and company. (Notably, shares of pharmaceutical giant Eli Lilly plummeted after a copycat tweeted Insulin is now free) All of this has scared advertisers, with many big brands announcing they will pause X advertising through the end of 2022. Media Matters USA Report It found that half of Twitter’s 100 largest advertisers paused ad spending in Musk’s first month (only some of them were GARM members). Subsequent controversyIncluding placing ads next to pro-Nazi content, causing more advertisers to close their wallets. Data from media intelligence company Guideline shows that national advertising spending on X fell 65% from spring 2023 to 2024. information.

Musk seemed to take the big-money departure as a personal affront. Last fall, at DealBook, an annual business conference, he expressed open hostility toward the customers who form the lifeblood of all social media companies. “If someone tries to extort me with advertising, extort me with money, Fuck you” he said in an interview with host Andrew Ross Sorkin. He later backtracked on the statement at the Cannes Lions International Advertising Awards, saying he Does not mean all.

It’s not uncommon for brands to pause advertising when they’re concerned about reputational damage. In 2020, Meta became the target of a brief but well-publicized anti-hate speech campaign, #StopHateForProfit, when Over 1,000 companies Temporarily remove ads from Facebook. When the hype dies down and brands are assured they won’t be promoted next to posts praising Hitler, they usually return. According to the New York Times In June, X claimed that more than half of its erroneous advertisers would return by 2024. Early JulyX announced that it had “reinstated” its GARM membership. Now, relations appear to have deteriorated again.

As a consumer, if you want Quit Bud Light For the rest of your life – party hard. If this boycott is so successful (which most consumer boycotts are not) that it causes the company to financially collapse, then too bad for them.

The situation gets trickier when some companies boycott another, which can be an illegal action. Collective boycott. Suppose you have just opened a new lemon stand in your town, but the neighborhood lemonade stand association tells you that they have an agreement not to buy your lemons unless you agree not to sell to a certain lemonade stand that they want out of business – you might want to file a complaint with the FTC. If X is the victim of an illegal boycott, first it must prove that there was an agreement among the advertisers. X believes that GARM’s public announcement amounts to a coordinated boycott, primarily because A letter from October 2022 GARM called on the social media site to “fulfill its previous commitments to the Alliance.” It warned that it would look at the site’s content moderation efforts and said members would use GARM’s insights “as part of their own independent assessments.” X’s lawsuit claimed the letter conveyed a “written plan of conspiracy.”

But GARM members denied any agreement or conspiracy. hearing This summer, the president of Unilever USA testified that GARM had never asked him to avoid advertising on any platform. One hurdle in the lawsuit is that X will have to prove not only that the company adopted GARM’s standards and definition of harmful content to justify removing the ads, but also that there was a binding agreement.

Antitrust law focuses on conduct that has a significant anticompetitive effect, typically involving cartels. GARM does not appear to be a cartel, a term typically applied to agreements between competitors in the same industry for business interests, such as egg producers banding together to limit egg supplies. The defendants may argue that they are not competitors, and neither is X — GARM is a sprawling alliance that includes advertising groups, tech companies, automakers, consumer brands, and more. There is no evidence that advertisers who leave X expect to gain financially from the boycott. Plus, there’s the First Amendment to consider: Generally, political and social boycotts are protected even if companies reach an agreement that has anticompetitive effects, Waller said.

Waller said at the hearing that antitrust laws “generally do not micromanage companies’ decisions as they decide what’s best for them in the marketplace.” Rep. Jerry Nadler (D-NY) called the hearing part of a “sham investigation” and said it served to “intimidate free speech.”

It is unclear how far X’s lawsuit will go. Both parties sued and Being sued. Sometimes fighting Accidentallyand other times not. Recently, a California court dismissed X’s lawsuit last year against a Hate speech watchdog has documented the rise of hate speech on the site.With its latest legal action, X is making a “Hotel California” argument: Advertisers can check out anytime, but they can never leave.

Update: August 9, 10:05 a.m. ET: This story was originally published on August 8 and has been updated with news of GARM’s closure.