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X sues companies for not advertising
“Don’t advertise. Go fuck yourself. Is that clear?” That’s what Elon Musk openly advised companies that think his microblogging platform X is an unhealthy environment for their brands. He said he didn’t want them to book advertising on X. That was in November. Now his company is suing an association and four corporations, including Mars, because they followed his advice and didn’t book advertising on X. Not buying from X (formerly Twitter) together is illegal.
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The defendants are the industry association World Federation of Advertisers, Unilever, Mars, the US medical group CVS Health and the majority state-owned Danish energy group Ørsted. X is demanding triple compensation for lost advertising revenue plus interest and legal costs – not only for the damage allegedly caused by the defendants, but also for the damage allegedly caused by non-defendant “co-conspirators”. In addition, the US federal district court should prohibit the defendants from continuing to jointly advertise with X.
Voluntary GARM Guidelines
The lawsuit is directed against the Global Alliance for Responsible Media (GARM), whose members include X itself. GARM is an initiative of the industry association World Federation of Advertisers, based in Belgium. Its members are supposed to avoid financially rewarding illegal or harmful content through their advertising and thereby damaging the reputation of their brand. At the same time, GARM is supposed to promote competition between advertising platforms.
The GARM website cites child pornography and content promoting terrorism as examples of undesirable content in addition to advertising. The initiative was prompted by the live stream of a terrorist attack on worshipers in a church in New Zealand that was broadcast on Facebook. GARM members include advertisers, advertising agencies and advertising platforms such as Meta Platforms, X and YouTube.
Membership in the initiative is voluntary, as is compliance with the established guidelines. GARM does not make any decisions about advertising bookings, does not make any recommendations about specific bookings, and expressly does not sanction violations of the guidelines.
The alleged group boycott
The lawsuit alleges that following Musk’s acquisition of Twitter, the World Federation of Advertisers organized an advertising boycott against Twitter (now renamed X) to force Twitter to comply with GARM guidelines. The lawsuit cites an open letter from the association to Elon Musk dated October 31, 2022. Musk responded publicly at the time that nothing had changed in Twitter’s practices.
Several advertising agencies did not trust this, which is why they advised their clients in November 2022 not to place paid advertising on Twitter until further notice. In December, Twitter promised to take steps to comply with the guidelines – apparently Twitter had not followed the guidelines. It is now clear that X is a safe haven for Holocaust deniers, but not for major brands. According to the lawsuit, dozens of former advertising clients have stopped or significantly reduced their bookings – to date. Accordingly, X’s advertising revenue has fallen significantly.
X scores a legal own goal
X sees the simultaneous withdrawal of the advertising customers as a violation of Paragraph 1 des Sherman Antitrust Act aus 1890the nucleus of US competition law. It criminalizes contracts or conspiracies that affect trade or the economy. Civil law threatens damages, criminal law threatens conviction for a crime with heavy fines and prison sentences. At the same time, the lawsuit claims that 99 percent of the advertising placed on X in 2023 and 2024 appeared next to content that complied with GARM guidelines for protecting brand reputation.
However, the lawsuit shoots itself in the foot in the next paragraph: The alleged advertising boycott is “against the economic interests of the boycotting advertisers,” it says, because advertising is cheaper on X than on other social networks. According to established US case law, jointly organized boycotts can certainly violate the Sherman Act – but only if they are of economic benefit to the boycotters. If there are motives other than economic benefits, joint boycotts are therefore permissible (see National Association for the Advancement of Colored People v Claiborne Hardware CoUS Supreme Court 1982).
The lawsuit is called X v World Federation of Advertisers et al and is pending in the United States District Court for Northern Texas under case number 7:24-cv-00114. The case is also known as X v GARM known.
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