Elon Musk's X sues Mars, Unilever and other major advertisers, alleges unlawful boycott

Elon Musk's social media platform X, formerly known as Twitter, has sued a global advertising group and several major companies, including Mars and CVS Health. The lawsuit, filed in a Texas federal court, accuses the World Federation of Advertisers (WFA), Unilever, Orsted, Mars, and CVS Health of unlawfully conspiring to boycott X, leading to substantial revenue losses.

A conspiracy?

X claims that these advertisers, through the WFA's Global Alliance for Responsible Media initiative, collectively withheld "billions of dollars in ad revenue" from the social media giant. 

The lawsuit argues this action was a conspiracy that violated US antitrust law, and claims that the companies acted against their economic interests to harm X.

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Linda Yaccarino, X's chief executive, stated that "people are hurt when the marketplace of ideas is constricted. No small group of people should monopolize what gets monetised".

Why is X suing advertisers now?

After Musk took over Twitter, now X, in 2022, the company saw a significant decline in its ad revenue. 

It has been widely reported that advertisers were wary of their brands appearing next to harmful content that might not have been removed under Musk's leadership.

According to Christine Bartholomew, an antitrust expert and professor at the University at Buffalo's law school, proving unlawful boycotts can be challenging. 

In a conversation with Reuters, Bartholomew said that X must show there was an explicit agreement to boycott the platform.

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"Proving this requirement is no small hurdle" if the agreement was implicit, she notes. Even if X does succeed in this near impossible task, it cannot force companies to spend ad revenue on the platform," she added.

Filed in the Northern District of Texas and assigned to US District Judge Reed O'Connor, the lawsuit seeks unspecified damages and a court order to prevent further efforts to withhold ad dollars from X.

The company argues that it has applied brand-safety standards that "meet or exceed" its competitors and meet the Global Alliance for Responsible Media's specifications. It further argues that the alleged boycott made X a "less effective competitor" in the sale of digital advertising.

(With inputs from agencies)