Boost for Elon Musk As Texas AG Announces Plans to Investigate X Advertising Boycott
Ken Paxton, the Attorney General for Texas has announced plans to open investigations on the World Federation of Advertisers (WFA) of the X advertising boycott. TechCrunch reported that the Texas AG investigation will be seeking to establish whether WFA members conspired to in the specific social media platforms
An Orchestrated Boycott
The press release by the attorney general’s office did not state which social media platforms had been boycotted by members of the WFA. But Elon Musk’s X platform is among those that was hit by the boycott. In August 2024, X filed an antitrust lawsuit alleging the association orchestrated an illegal boycott of the platform.
Numerous WFA members either reduced their advertising spend on X or halted it completely as soon as Elon Musk took over the social media platform. The companies included global brands like Coca Cola, IBM, and CVS Health.
“Trade organizations and companies cannot collude to block advertising revenue from entities they wish to undermine. Today’s document request is part of an ongoing investigation to hold WFA and its members accountable for any attempt to rig the system to harm organizations they might disagree with,” Paxton said.
Reports that X had failed to moderate the platform by removing hateful or illegal content had further exacerbated the situation. The reports were published by Media Matters and the Center for Countering Digital Hate in November 2023. These reports triggered a massive exodus of advertisers that saw top brands like Disney and Apple quit the X platform.
Legal Action
Since 2023, X has been taking legal action against numerous advertising groups and brands. The Elon Musk lawsuit, X argues that the brands did not reduce their ad spend on the platform based individual decisions.
Rather, the brands conspired to collectively withhold revenue amounting to billions from X. Texas’ attorney general office is now commencing its own investigation to ascertain these allegations. Responding to Paxton’s statement regarding the advertiser investigation, Elon Musk said the issue still persists.
Just like the lawsuit filed by X, the Texas AG will be investigating a not-for-profit within the WFA that has since ceased operations. This is the Global Alliance for Responsible Media (GARM). The not-for-profit entity had been founded in 2019 and featured some of the biggest advertisers in the US.
The Search for Evidence
GARM had developed frameworks to help brands understand brand safety, hate speech, and misinformation. As the Texas AG investigates the matter, he will be keen to review the information and documents from GARM. The AG will be checking for evidence on whether GARM advised brands to boycott social media platforms that violated its brand safety standards.
Announcing the lawsuit filed by X against advertisers, the platform CEO, Linda Yaccarino had cited a July 2024 report by Judiciary Committee in the US House of Representatives regarding GARM’s practices.
“Through GARM, large corporations, advertising agencies, and industry associations participated in boycotts and other coordinated action to demonetize platforms, podcasts, news outlets, and other content deemed disfavored by GARM and its members. This collusion can have the effect of eliminating a variety of content and viewpoints available to consumers,” The Report read in part.
GARM closed soon after X filed its lawsuit in August 2024. The not-for-profit cited financial challenges as the reason for the closure. In recent months, some brands like Comcast, Disney, and IBM have started running ads on X. However, their ad spend is much lower than before.
The social media giant has been engaging brands to address the X advertising issues. Last month, the platform announced that Unilever had agreed to resume advertising on the platform. Previously, X had released names of brands that participated in the illegal boycott. As part of the agreement, the social media platform will be dropping this claim against Unilever.
