A US District Court judge in Texas dismissed a lawsuit filed by Elon Musk's X against major advertisers like Mars, Lego, and Nestlé.
The court cited a lack of jurisdiction and X's failure to state an antitrust claim as reasons for the dismissal.
Background of the Lawsuit
X initiated the lawsuit in August 2024, alleging that several major brands participated in an ad industry initiative called the Global Alliance for Responsible Media (GARM). X claimed this participation constituted a conspiracy to "collectively withhold billions of dollars in advertising" from the platform following Musk's acquisition of the company, then known as Twitter. X later added more brands to the suit.
The platform asserted that the alleged boycott reduced its competitiveness in attracting advertisers and user engagement compared to other platforms.
Other entities named as plaintiffs in the lawsuit included the World Federation of Advertisers (WFA), CVS Health, Ørsted, Twitch, Abbott Laboratories, Colgate-Palmolive, Pinterest, Tyson, and Shell. The WFA subsequently shut down GARM after the lawsuit was filed, attributing the decision to limited resources.
The lawsuit was partly influenced by an investigation led by House Judiciary Committee Chairman Jim Jordan. This investigation explored whether advertisers were colluding to demonetize conservative platforms and voices, potentially violating antitrust law.
Defendants' Response
The defendants countered the lawsuit, describing it as an attempt to leverage the legal system to regain business that X had lost in the free market. They argued that X had disrupted its own operations and alienated many customers.
X's Advertising Challenges
X's relationship with advertisers has been strained since Musk acquired the platform in 2022. A significant number of advertisers withdrew as X adjusted its moderation and account verification policies and reinstated certain previously banned accounts.
EMARKETER estimated X's revenue to reach $2.2 billion in 2026, which is below its pre-acquisition level of $4.5 billion. X has attempted to re-engage advertisers by emphasizing its commitment to brand safety and promoting its use of block lists, which allow advertisers to avoid appearing alongside specific content topics.