Elon Musk’s Unique Plan to Promote Advertising Revenue
August 7, 2024
Elon Musk’s social media company has a unique new strategy on the advertising front: take your advertisers to court.
The company formerly known as Twitter, now X, has sued a coalition of advertisers, accusing it of violating antitrust laws by organizing a boycott of the financially struggling platform. The New York Times provided the basic facts:
The suit, filed in federal court in Texas, claims that the coalition, known as GARM, “conspired” with leading brands, including CVS, Unilever, Mars and the Danish energy company Orsted, to “collectively withhold billions of dollars in advertising revenue” that were owed to X, then known as Twitter, in the wake of Elon Musk’s takeover of the social media company in 2022.
“The illegal behavior of these organizations and their executives cost X billions of dollars,” wrote Linda Yaccarino, X’s chief executive, in an open letter to advertisers. “People are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott.”
With the lawsuit, X effectively declared war on advertisers, which provide the bulk of the social media company’s revenue. Since Mr. Musk acquired the company and promised to usher in a new era of unfettered free speech, many advertisers have limited their spending on X, concerned by reports of rising hate speech and misinformation there. By pursuing legal action against GARM, Mr. Musk continued to break with the leaders of other social media companies, who have forged close relationships with advertisers and been responsive to their concerns about offensive online content.
Since acquiring Twitter two years ago, Musk has demonstrated that he values the company as a means for self-expression and drawing attention to his libertarian ideology. More recently, he has become the effective online gatekeeper for the Trump wing of the Republican Party.
The cost of this strategy, which has included drastically reducing content moderation and welcoming back right-wing extremists who previously had been banned by the platform, has been measured in alienated advertisers that have fled X, taking their ad dollars with them. One suspects that X’s rank-and-file ad salespeople may be rooting for a quick dismissal of their owner’s litigation gambit.
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