In the antitrust lawsuit, filed by X in Texas court Tuesday, the Elon Musk-owned social media platform claims that several global companies were part of an organized agreement involving an initiative called Global Alliance for Responsible Media (GARM), whose stated goal is to address the challenge of monetizing harmful content on social media through advertising.Pool/Reuters
A day after Elon Musk’s X sued a coalition of companies alleging anti-competitive behaviour for not advertising on his social media platform, experts say the facts in the case suggest the advertising association’s actions may indeed constitute an illegal boycott.
X, formerly Twitter, filed a lawsuit against the World Federation of Advertisers, and claimed the coalition and several companies under its umbrella conspired to deprive it of billions of dollars by withdrawing their advertisements from the site following Mr. Musk’s purchase of the company in 2022.
Numerous lawyers on Wednesday told The Globe the lawsuit’s allegations suggest the accused parties did cross the line between individual company decision and illegal collaboration. But the San Francisco-based social media company will need to prove more than the alleged agreement among the advertisers to get the damages it is claiming.
In the antitrust lawsuit, filed by X in Texas court Tuesday, X claims that several global companies were part of an organized agreement involving an initiative called Global Alliance for Responsible Media (GARM), whose stated goal is to address the challenge of monetizing harmful content on social media through advertising.
GARM was established in 2019 by the World Federation of Advertisers, a trade organization representing 90 per cent of global marketing communications spending – roughly US$900-billion a year – according to its website.
Barak Orbach, a law professor at The University of Arizona, said that if the complaint’s statements are correct, GARM had been “shockingly sloppy” in allegedly requiring members to relinquish independent decision-making in certain contexts.
In its legal filing, X alleges a precondition of signing up as a member of GARM was a commitment to withhold advertising from platforms determined by the organization to be non-compliant with the brand safety standards. The company claimed GARM told its members X deviated from its brand safety standards.
Douglas Ross, a professor at the University of Washington School of Law, said the filing is full of evidence, including e-mails between companies, that the decision to withdraw from X was collective. “X has got a claim here that is going to be difficult to dismiss. That there is an agreement seems beyond doubt.”
“When you collectively do this with your competitors, that’s where the issue [is],” said John Yun, an associate professor of Law at George Mason University. “The courts will ask, couldn’t you have done this through less restrictive means?”
While he said he doesn’t believe the behaviour will ultimately be ruled illegally anti-competitive, he expects the case to be “messy.”
Rebecca Haw Allensworth, a professor at the Vanderbilt Law School in Tennessee, said cases like this often fall apart on proof of agreement. While X alleges potentially strong evidence the brands engaged in an exchange of promises, “the devil is always in the details,” Prof. Allensworth said. “The legal bar to show conspiracy is notoriously high, and very fact specific.”
To claim damages, X will have to convince the judge that the agreements harmed competition. According to Prof. Orbach, the company’s allegations in its filing are “hyperbolic and some are legally incorrect.”
The lawyers agreed that while X could claim damages, it cannot force companies to advertise on its platform.
The lawsuit reflects rising debates about whether, and to what degree, companies should agree on standards that go beyond what is mandated by the law. While companies – which often group together in trade associations with certain protections – may argue that setting standards protects consumers, it can be difficult to legally establish a company’s intention between “good behaviour” and antitrust behaviour.
Aside from the World Federation of Advertisers, the suit names global food producers Mars Inc., Unilever PLC, American pharmacy chain CVS Health Corporation and Danish energy company Ørsted A/S. X is seeking damages and a court order against companies that conspire against it in the future.
The defendants have yet to file a response to the complaint. Spokespeople for the World Federation of Advertisers and Ørsted declined to comment. Mars, Unilever and CVS did not respond to requests for comment.
In 2022, after Mr. Musk bought X in a controversial acquisition deal, some advertisers became wary of advertising on the platform, amid concerns about the company’s approach to taking down harmful content. The majority of X’s revenue comes from advertising, and in the first year after he purchased the company, its ad revenue dropped by 53 per cent year-over-year.
Since acquiring the company, Mr. Musk has promised to uphold the values of free speech on his platform. X has revoked bans on extremist content, censoring journalists and removed the “blue check mark,” a feature which identifies verified users.
In July, Mr. Musk reposted a post on X that features a deep fake of Vice-President Kamala Harris’s voice, without stating that the representation had been digitally reproduced and was not legitimate. He also endorsed an antisemitic conspiracy theory on the platform, later apologizing for doing so. Mr. Musk has endorsed Donald Trump for president.