On Tuesday, Elon Musk’s social media platform X sued a global advertising alliance and several major companies, including Mars and CVS Health (NYSE: CVS), accusing them of unlawfully conspiring to boycott the site and causing it to lose revenue.
X filed the lawsuit in federal court in Texas against the World Federation of Advertisers, Unilever (NYSE: UL), Danish renewable energy company Orsted, in addition to Mars and CVS Health.
The lawsuit said advertisers, acting through a World Federation of Advertisers initiative called Global Alliance for Responsible Media, collectively withheld “billions of dollars in advertising revenue” from X, previously known as Twitter.
It said they acted against their economic self-interests in a conspiracy against the platform that violated U.S. antitrust law.
The World Federation of Advertisers, Unilever, Mars and CVS Health did not immediately respond to requests for comment. Orsted declined to comment on Wednesday.
In a statement on Tuesday about the lawsuit, X’s chief executive Linda Yaccarino said “people are hurt when the marketplace of ideas is constricted. No small group of people should monopolize what gets monetized.”
Ad revenue at X slumped for months after Musk bought the company in 2022. Some advertisers had been wary of ad spending under Musk amid questions and fears that their brands would appear next to harmful content that under prior owners might have been removed.
The advertising group launched the responsible media initiative in 2019 to “help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization via advertising.”
Christine Bartholomew, an antitrust expert and professor at University at Buffalo’s law school told Reuters that lawsuits alleging unlawful boycotts can face a high bar.
X must show that there was an actual agreement to boycott joined by each advertiser, Bartholomew said. “Proving this requirement is no small hurdle” in cases where an agreement might be implicit, she said.
Even if the case succeeds, X cannot force companies to spend ad revenue on the platform, Bartholomew said.
The case was filed in the Northern District of Texas and assigned to U.S. District Judge Reed O’Connor. The district has become a favored destination for conservatives suing to block Biden administration policies.
X said in its lawsuit that it has applied brand-safety standards that are comparable to those of its competitors and that “meet or exceed” measures specified by the Global Alliance for Responsible Media.
The lawsuit said X has become a “less effective competitor” in the sale of digital advertising.
X is seeking unspecified damages and a court order against any continued efforts to conspire to withhold ad dollars.
On Tuesday, video-sharing company Rumble (NASDAQ: RUM) filed a separate antitrust lawsuit against the World Federation of Advertisers.
(Source: ReutersReuters)
