X has initiated a lawsuit against additional advertisers, alleging a coordinated antitrust violation linked to what CEO Linda Yaccarino describes as a “systematic illegal boycott.”
Previously known as Twitter, the company lodged its initial lawsuit against the World Federation of Advertisers (WFA) and its brand safety initiative, the Global Alliance for Responsible Media (GARM), in August 2024.
Shortly after the lawsuit was filed, the WFA terminated GARM, citing that “recent allegations that unfortunately misconstrue its purpose and activities have caused a distraction and significantly drained its resources and finances.” Concurrently, the CEO of the organization reportedly informed members that they would oppose the lawsuit and “prove our complete compliance with competition regulations across all our activities.”
X has since included additional advertisers, such as Twitch, as parties in the lawsuit. Recently, an amended complaint has broadened the scope of the suit to include major brands like Nestlé, Abbott Laboratories, Colgate, Lego, Pinterest, Tyson Foods, and Shell, as first reported by Business Insider.
The lawsuit asserts that the WFA “orchestrated an advertiser boycott of Twitter via GARM with the intent of pressuring Twitter to adhere to the GARM Brand Safety Standards as dictated by GARM.” It alleges that these actions negatively impacted Twitter/X, with “at least” 18 advertisers linked to GARM ceasing their ad purchases on the platform between November and December 2022, while several others significantly cut their expenditures.
According to the complaint, “the majority of X’s advertising revenue today is derived from small- and medium-sized enterprises that are neither GARM members nor clients of GARM-associated advertising agencies.” The document further states that “as demand for advertising on X has waned due to the boycott, the rates that X’s remaining advertisers are prepared to offer have also diminished.”
In fact, the lawsuit contends that advertising costs on X “remain markedly lower than those of X’s nearest rivals in the social media advertising arena,” which means that “by abstaining from purchasing ads on X, boycott-affiliated advertisers are missing out on a valuable chance to acquire affordably priced advertising opportunities on a platform that provides brand safety that meets or surpasses industry benchmarks.”
This lawsuit isn’t the only venue where executives have expressed a grim outlook on X’s operations. Reports indicate that company owner Elon Musk informed staff in January that “user growth is stagnant, revenue is unimpressive, and we’re barely breaking even.”
Compiled by Techarena.au.
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