X (formerly Twitter) Expands Lawsuit Over Advertiser Boycott

X Expands Antitrust Lawsuit Against Advertisers

X is currently pursuing legal action against a growing number of advertisers, alleging an antitrust violation. This lawsuit centers around what CEO Linda Yaccarino has characterized as a “systematic illegal boycott.”

Initial Filing and GARM Discontinuation

The company, previously known as Twitter, initially launched the lawsuit in August 2024. The defendants included the World Federation of Advertisers (WFA) and its brand safety initiative, the Global Alliance of Responsible Media (GARM).

Following the lawsuit's filing, the WFA decided to discontinue GARM. This decision stemmed from allegations that misrepresented the initiative’s objectives and activities, leading to resource depletion and financial strain.

Simultaneously, the WFA’s CEO communicated to its members the intention to vigorously defend the lawsuit. The organization pledged to demonstrate full compliance with competition regulations in all its operations.

Expansion of the Lawsuit

X subsequently broadened the scope of the lawsuit by adding advertisers like Twitch as defendants. Recent amendments, as first reported by Business Insider, have further expanded the list to include prominent companies such as Nestlé, Abbott Laboratories, Colgate, Lego, Pinterest, Tyson Foods, and Shell.

Allegations in the Complaint

The complaint asserts that the WFA orchestrated an advertiser boycott of Twitter through GARM. The stated aim was to pressure Twitter into adhering to the GARM Brand Safety Standards.

It is claimed that these efforts resulted in demonstrable harm to Twitter/X. At least 18 advertisers affiliated with GARM ceased purchasing ads on Twitter between November and December 2022.

Furthermore, other advertisers reportedly significantly decreased their advertising expenditure on the platform during the same period.

Impact on Revenue and Advertising Prices

The complaint highlights that the majority of X’s current advertising revenue originates from small- and medium-sized businesses. These businesses are not members of GARM, nor are they clients of GARM-member advertising agencies.

As a consequence of the alleged boycott, demand for advertising on X has declined. This has led to a reduction in the prices that remaining advertisers are willing to pay.

The lawsuit contends that advertising prices on X “remain well below those charged by X’s closest competitors in the social media advertising market.” Advertisers participating in the boycott are, therefore, missing out on the opportunity to acquire cost-effective advertising inventory on a platform that meets or surpasses industry brand safety benchmarks.

Internal Assessment of Business Performance

Beyond the legal proceedings, internal assessments have painted a challenging picture of X’s business. Elon Musk, the company’s owner, reportedly informed employees in January that user growth has stalled.

He also indicated that revenue figures are unsatisfactory and that the company is barely achieving profitability.