Fellas, 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 an eyebrow-raising lawsuit against an advertising industry group and several major brands, including Unilever (maker of Dove soap), Mars Inc. (maker of lots of candy), and CVS. It argues that the companies coordinated an advertising boycott against X that not only led to “massive economic harm,” but even violated antitrust law because they colluded to specifically target X, making it less competitive in selling digital ads.
Since having to buy the site for a painful $44 billion in 2022, Musk has tried to turn it into a haven of unmoderated speech. Critics have argued that the site, often called a “hellsite” for how toxic it could be even before the Musk era, became an unusable cesspit of vitriol and incoherent porn bots. Advertisers fled, because businesses don’t want to risk their ads showing up next to objectionable or outright illegal content, like child sexual abuse material. This is very bad for X, since, like other social media companies, it would go belly up without ad money. X contends this cessation of business is a “naked restraint of trade” because advertisers collectively forced the site to adhere to their content standards. It even had to lower its ad prices, the filing alleges.
The lawsuit places the bulk of the blame on the Global Alliance for Responsible Media (GARM), an initiative launched in 2019 to establish a standard for brand safety across ad platforms. GARM’s membership, which was listed on the site as of August 6, includes consumer brands, ad agencies, and media companies where ads are served (such as Spotify and, up until recently, X), asking them to commit to a shared understanding of what counts as harmful or risky content that shouldn’t be monetized by ads. Membership is voluntary, and GARM says that individual advertisers ultimately decide how and where they advertise. It did not reply to a request for comment. Just days after the lawsuit was filed, Stephan Loerke, CEO of the World Federation of Advertisers — the larger ad industry association that GARM is part of — told members that GARM would be shutting down, according to an email obtained by Business Insider. The group denies any wrongdoing, but noted that it had limited financial resources as a nonprofit. Loerke made clear, however, his confidence that GARM would be vindicated in court.
None of this has stopped X from portraying its plummeting ad revenue as a matter of criminal injustice. X says in the lawsuit that at least 18 GARM members pulled all ads from X in late 2022, while many more reduced their spending significantly. In a video posted on X, CEO Linda Yaccarino made a grave appeal to X users, arguing that advertisers, not X’s chaotic management, have threatened the financial future of an important platform. “That puts your global town square — the one place that you can express yourself freely and openly — at long-term risk,” she said, echoing the refrain that X is a champion of uncensored free expression despite the fact that it moderates content, even if some say its policies are unclear.
X’s lawsuit comes a month after a Republican-led House Judiciary Committee report and hearing on GARM made similar antitrust accusations, saying the group financially starved platforms hosting content it doesn’t approve of. It’s a continuation of a longer debate around free speech and its consequences. You have the right to speak, but do you have the right to get rich from monetizing your speech? If X goes bankrupt because it turns off too many advertisers, is anyone but X to blame?
On X, House Judiciary Committee Republicans celebrated news of GARM’s shutdown as a “win for the First Amendment,” while Yaccarino called the move an “important acknowledgement” showing that “no small group should be able to monopolize what gets monetized.”
Loyola University antitrust law professor Spencer Weber Waller, who testified at the GARM hearing, tells Vox that he’s skeptical of the lawsuit’s merits. “Just because you’re mad about something doesn’t mean it’s illegal,” he says.
Elon’s beef with advertisers, explained
Musk has had a volatile relationship with X advertisers for years. Here’s a quick recap: Musk took over in October 2022 and started laying off thousands of employees. Some of the heaviest cuts were made to the safety team, including content moderators, which signaled to advertisers that brand safety wouldn’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 companies. (Notably, pharma giant Eli Lilly’s stock tumbled when an impersonator tweeted that insulin would now be free.) All of this scared advertisers, and many big brands announced they were pausing their X ads in late 2022. A Media Matters for America report found that half of Twitter’s 100 biggest advertisers had paused spending in the first month of Musk’s takeover (only some of which are GARM members). Other controversies since then, including ads being placed next to pro-Nazi content, have led to more advertisers shutting their pocketbooks. Data from the media intelligence firm Guideline shows there was a 65 percent decline in national ad spending on X between spring 2023 and 2024, according to The Information.
Musk seems to have taken this exodus as a personal affront. Last fall, at the annual business conference DealBook, he was outright hostile to the clients that make up the lifeblood of all social media companies. “If somebody is going to try to blackmail me with advertising, blackmail me with money, go fuck yourself,” he said during an interview with host Andrew Ross Sorkin. He later hedged the declaration at the Cannes Lions advertising awards, saying he didn’t mean all of them.
It’s not uncommon for brands to pause ads when they fear reputational harm. Meta was the target of a brief but much-publicized anti-hate speech campaign called #StopHateForProfit in 2020, when over 1,000 companies temporarily pulled ads on Facebook. When the heat dies down and brands are reassured that they won’t be promoted next to a post that, say, praises Hitler, they often return. The New York Times reported in June that X was claiming over half of its errant advertisers had come back in 2024. In early July, X announced it had “reinstated” its GARM membership. Now, the relationship appears to have soured again.
When is a boycott illegal?
As a consumer, if you want to swear off Bud Lights for the rest of your life — go wild. If it’s so successful (most consumer boycotts aren’t) that it leads to a company’s financial ruin, then too bad for them.
It gets trickier when a bunch of companies boycott another company, which could be an illegal group boycott. Let’s say that you just opened a new lemon stall in town, but the neighborhood lemonade stand association tells you they made a pact not to buy your lemons unless you agree not to sell to one specific lemonade stand they hope will go out of business — you might want to complain to the Federal Trade Commission. For X to be the victim of an illegal boycott, first it has to establish there was an agreement between advertisers. X is arguing that GARM’s public statements amount to a coordinated boycott effort, mostly because of an October 2022 letter from GARM calling on the social media site to “uphold its previous commitments” to the alliance. It warned that it would watch the site’s content moderation efforts and that members would use GARM’s insights “as part of their own independent assessments.” X’s lawsuit claims the letter communicated “written plans for a conspiracy.”
But GARM members deny that there was any agreement or conspiracy. During the House Judiciary Committee’s hearing this summer, the president of Unilever USA testified that GARM had never required it to avoid advertising on any platform. A big hurdle of the lawsuit is that X has to prove not just that companies adopted GARM’s standards and definitions of harmful content to justify pulling ads, but that there was a binding agreement.
Antitrust law is concerned with actions that have major anticompetitive effects, often involving cartels. GARM doesn’t appear to be a cartel, a term that usually applies to competitors in a common industry making a commercially beneficial agreement with one another, like if egg producers banded together to limit the supply of eggs. The defendants will likely argue that they’re not competitors, nor is X a competitor — GARM is a vast coalition including ad groups, tech companies, car makers, consumer packaged goods brands, and more. At this point there’s no evidence that advertisers who left X were looking for a financial benefit by boycotting. Then there’s the First Amendment to consider: generally, political and social boycotts are protected even if the companies made an agreement that had an anticompetitive impact, says Waller.
Antitrust laws “generally don’t micromanage the decisions of corporations as they decide what’s best for them in the market,” Waller said during the hearing. Rep. Jerry Nadler (D-NY) called the hearing a part of a “sham investigation,” saying that it served to “intimidate the exercise of free speech.”
It’s unclear how far X’s lawsuit will get. Musk is certainly no stranger to both suing and being sued. Sometimes the fight has unexpectedly gone his way, while other times it hasn’t. Recently, a California court dismissed a lawsuit X filed last year against a hate speech watchdog that had documented the rise of hateful rhetoric on the site. With this latest legal volley, X is making the Hotel California argument: Advertisers can check out any time they like, but they can never leave.
Update, August 9, 10:05 am ET: This story was originally published on August 8 and has been updated with news of GARM’s shutdown.
Source: vox.com
