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Published on
August 9, 2024
8 min read
Global Advertiser Group Shuts Down After X Ad Boycott Lawsuit
The global advertising group that’s at the heart of the X boycott lawsuit has shut down. The Global Alliance for Responsible Media informed its members that it would close down just two days after Elon Musk accused it.
The New York Times reported that X sued the advertisers for conspiring to boycott the platform unlawfully, leading to revenue losses. The X advertisers boycott lawsuit was filed in a federal court in Texas’ Northern District.
Conservatives who file lawsuits to block policies advanced by the Biden administration prefer to do so in this District. The respondents in the case include the World Federation of Advertisers, the Mars group, and Orsted, Unilever, and CVS Health.
Revenue Losses
In the lawsuit, X claims that through the Global Alliance for Responsible Media, the World Federation of Advertisers withheld revenue amounting to billions of dollars from X.
The social media platform claims the advertisers acted on their own economic self-interests and that their conspiracy violates the U.S. antitrust law.
In a statement released on Tuesday, Linda Yaccarino, Chief Executive at X said, “People are hurt when the marketplace of ideas is constricted.”
X experienced a slump in ad revenue for several months after Elon Musk acquired the company in 2022. Some advertisers became wary of spending on ads under MusK because they feared their brands would be featured near harmful content, which under previous owners, was a ground for removal.
High Threshold
The Global Alliance for Responsible Media was launched in 2019 to help advertisers overcome the challenge of harmful or illegal content on digital media platforms.
According to University of Bufallo Professor and Antitrust Expert, Christine Bartholomew, the burden of proof in advertising boycott lawsuits that allege unlawful actions is very high. X must prove that there was a real agreement to boycott its platform that each advertiser was party to.
Meeting this requirement can be challenging when such an agreement is not explicit. Additionally, X cannot force advertisers to spend on its platform even if it succeeded in the current lawsuit.
In the lawsuit, X claims that it applies brand-safety standards similar to those that its competitors use and that are in line with the measures that the Global Alliance for Responsible Media specified. Besides X, the World Federation of Advertisers was also sued by Rumber, the video sharing company.
Financial Challenges
The World Federation of Advertisers denied that the Global Alliance for Responsible Media violated the U.S. antitrust law. However, it said the organization lacked financial resources to sustain operations as it battles the X lawsuit.
“I am confident that the outcome will demonstrate our full adherence to competition rules in all our activities,” Word Federation of Advertisers Chief Executive, Stephan Loerke said in an email.
News of the Global Alliance for Responsible Media closure was celebrated at X.
“No small group should be able to monopolize what gets monetized. This is an important acknowledgment and a necessary step in the right direction. I am hopeful that it means ecosystem-wide reform is coming,” Yaccarino said in a post.
The Global Alliance for Responsible Media closed operations immediately. However, the World Federation of Advertisers will maintain operations.
