Guys, is it illegal for brands to refuse to advertise on my social media site? If you’re Elon Musk, the answer is yes.
This week, Musk’s social media company X (formerly Twitter) filed a Case raising eyebrows against an advertising industry group and several major brands including Unilever (maker of Dove soap), Mars Inc. (maker of many candies) and CVS. It argues that the companies coordinated an ad boycott against X that not only caused “massive economic harm,” but also violated antitrust laws because they banded together to specifically target X, making it less competitive in digital ad sales. .
Since buying the troubled site for $44 billion in 2022, Musk has tried to turn it into a haven for unfettered speech. Critics have argued that site, often is called a “Hell Site” Even before the Musk Age, how poisonous it could be, it became an unusable cesspit vitriol And Unaffiliated porn bots. Advertisers have fled, because businesses don’t want to risk their ads appearing offensive or direct Illegal contentlike Child sexual abuse material. This is too bad for X, since like other social media companies, it will go belly up without advertising money X claims that this ban is a “bare restraint of trade” because advertisers collectively force the site to adhere to their content standards. It even had to cut advertising prices, the filing alleged.
The lawsuit assigns most of the blame Global Alliance for Responsible Media (GARM), an initiative launched in 2019 to establish a standard for brand safety across advertising platforms. Membership of GARM, which was listed on the site As of August 6Consumers include brands, advertising agencies and media companies where ads are served (such as Spotify and, until recently, X), asking them to commit to a shared understanding of what counts as Harmful or risky content That should not be monetized by advertising. Membership is voluntary, and GARM says individual advertisers ultimately decide how and where they advertise. It did not respond to requests for comment.
None of this stopped X from being portrayed Advertising revenue is falling As a matter of criminal injustice. X said in the lawsuit that at least 18 GARM members pulled all advertising from X by the end of 2022, while many others significantly reduced their spending. A video Posted on X, CEO Linda Iaccarino made a serious plea to X users, arguing that advertisers, not X’s chaotic management, threatened the financial future of an important platform. “It puts your global town square — a place where you can express yourself freely and openly — at risk in the long term,” he said, adding that X is a champion of uncensored free expression that regulates content, even if someone says so. Policies are vague.
X’s lawsuit comes after a month of Republican-led Report of the House Judiciary Committee And the hearing Similar mistrust has been leveled at GARM, saying the group does not approve of hosting content on financially starved platforms. This is a continuation of the long debate about freedom of 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 because it shuts down too many advertisers, is anyone else to blame but X?
Loyola University antitrust law professor Spencer Weber Waller, who testify At the GARM hearing, Vox said he was skeptical of the case’s merits. “Just because you’re crazy about something doesn’t mean it’s illegal,” he says.
Elon’s beef with advertisers, explained
Musk has had a rocky relationship with X advertisers over the years. Here’s a quick recap: Kasturi took over in October 2022 and began laying off thousands of employees. Some of the heaviest cuts have been made security teamincluding Content ModeratorWhich signals to advertisers that brand safety won’t be a priority under Musk’s reign. Twitter’s old identity verification system, which gave a blue check mark to verified public figures and official brand accounts, was removed — which predictably led to a wave of trolls. Impersonating famous people and company. (Notably, pharma giant Eli Lilly’s stock fell when an impostor tweeted that Insulin will now be free.) All of this scared advertisers, and many big brands announced that they were ending their X ads by the end of 2022. Media Matters for America reports It found that half of Twitter’s 100 largest advertisers stopped spending in the first month of Musk’s takeover (including only some GARM members). other Controversy since thenIncluding advertising next to pro-Nazi content, has put more advertisers off their pocketbooks. Data from media intelligence firm Guidelines shows that national ad spending on X is expected to drop 65 percent between 2023 and spring 2024, according to Information.
Kasturi seems to have taken the exit as a personal insult. Last fall, at the annual business conference Dealbook, he was downright hostile to all social media companies’ vibrant clients. “If someone tries to blackmail me with ads, blackmail me with money, Fuck yourself“He said during an interview with host Andrew Ross Sorkin. He later announced at the Cannes Lions Advertising Awards, he said. They don’t mean everything.
It’s not uncommon for brands to pause ads when they fear reputational damage Meta was the target of a short but widely publicized anti-hate campaign in 2020 called #StopHateForProfit, when Over 1,000 companies Temporarily pulling ads on Facebook. When the heat dies down and brands are assured that they won’t be promoted next to posts praising Hitler, they often come back. D The New York Times reported In June X claimed that more than half of its false advertisers had returned in 2024. Early JulyX has announced that it has “reinstated” its GARM membership Now, relations appear to be sour again.
When is a boycott illegal?
As a consumer, if you want to turn off Bud Light for the rest of your life – go wild. If it’s so successful (mostly not a consumer boycott) that it leads to a company’s financial ruin, then too bad for them.
This becomes more complicated when a group of companies boycotts another company, which can be illegal Group boycott. Let’s say you’ve just opened a new lemonade stand in town, but the neighborhood lemonade stand association tells you they’ve made an agreement not to buy your lemons unless you agree to sell them at a certain lemonade stand, hoping the business will go out of business — You may want to file a complaint with the Federal Trade Commission. For X to be the victim of an illegal boycott, it must first be established that there was an agreement between the advertisers. X argues that GARM’s public statements amount to a concerted boycott effort, for several reasons An October 2022 letter GARM called on social media sites to “maintain previous commitments” to the alliance It warned that it would look into efforts to moderate the site’s content and that members would use GARM’s insights “as part of their own independent assessment”. X’s suit claimed that the letter stated “a written plan for a conspiracy”.
But GARM members denied that there was any collusion or conspiracy. During the House Judiciary Committee the hearing This summer, the president of Unilever USA testified that GARM has never needed to avoid advertising on any platform. A major hurdle in the case is that X needs to prove that the companies adopted GARM’s standards and definitions of harmful content to justify pulling ads, but there was a binding contract.
Antitrust law deals with actions that have major competitive effects, often involving cartels. GARM does not appear to be a cartel, a term generally applied to competitors in a common industry who enter into commercially beneficial agreements with each other, such as egg producers banding together to limit the supply of eggs. The defendants will likely argue that while they are not competitors, X is not even a competitor — GARM is a massive conglomerate that includes advertising groups, technology companies, automakers, consumer packaged goods brands, and more. At this point there is no evidence that the advertisers who left X were seeking financial benefit by boycotting. Then there’s the First Amendment to consider: Generally, political and social boycotts are protected even if companies enter into an agreement that has a competitive effect, Waller said.
Antitrust laws “generally don’t micromanage the decisions of corporations as they decide what’s best for them in the marketplace,” Waller said during the hearing. Rep. Jerry Nadler (D-NY) called the hearing a part of a “scandalous investigation,” saying it “intimates the exercise of free speech.”
It is unclear how far X’s case will go. Musk is certainly no stranger Both cases And A case is being filed. Sometimes the fight went his way unexpectedly, other times it didn’t. Recently, a California court dismissed a case X last year Hate speech surveillance That site had documented the rise of hate speech. With this latest legal volley, X Hotels California is making the argument: Advertisers can check out whenever they want, but they can never leave.
