Elon Goes to War on Big Advertising

It’s not exactly breaking news that big advertisers flee from controversial content—and when it comes to social media, no content is more controversial than that on X, which Elon Musk bought in 2022 for $44 billion. Sure enough, as X embraced once-banned content—like, you know, Covid skepticism or criticisms of DEI—and as Musk himself has become an increasingly divisive figure, many advertisers have concluded they no longer want to be associated with the company once known as Twitter.

The numbers are astonishing. According to Bloomberg, the platform’s ad revenue was down by at least 60 percent as of December 2023 in the U.S., putting the company $5 billion behind where it had expected to be prior to the Musk takeover. His efforts to woo advertisers back have gotten, as he put it, “nothing but empty words,” so he’s taken a classic Musk step: he filed a lawsuit. “Now it is war,” he posted on X on Tuesday.

The suit alleges that the World Federation of Advertisers (WFA), whose members include 150 of the world’s largest advertisers, along with big-name corporations like Unilever, Mars, and CVS, have conspired to boycott X after Musk bought it, claiming that the site failed to meet the association’s “brand safety standards” for internet content. 

He has a point. Advertisers still flock to competing social media companies like Facebook and Instagram even though they have their share of unsavory content. What’s more, according to the lawsuit, X now has brand safety standards—giving advertisers control of the placement of their ads, just like Facebook and Instagram—that “meet or exceed” the standards of WFA and its social media initiative, called the Global Alliance for Responsible Media (GARM). 

So why is the boycott continuing? The answer, believes Musk, is that the WFA disagrees with X’s political content. And he’s not the only one who thinks that. The House Judiciary Committee conducted an investigation of the boycott and concluded, “The information uncovered to date of WFA and GARM’s collusive conduct to demonetize disfavored content is alarming.”

As egregious as the behavior of the advertisers sounds, Musk’s lawsuit is the longest of long shots. There is nothing illegal about companies pulling their advertising from shows or sites they no longer favor. As Unilever’s president Herrish Patel claimed in a statement given at a recent House Judiciary committee hearing, “No platform has a right to our advertising dollar.” 

A second problem for Musk is that the practice of associations setting industry standards is common, which courts are unlikely to take seriously as an antitrust violation. “What GARM has been doing is absolutely consistent with what trade associations have historically done for decades and decades and decades,” Randall Rothenberg, the former CEO of the Interactive Advertising Bureau, told The Free Press.

As for why advertisers shy away from controversial content, Rothenberg said it just makes business sense. “Because if you do that, then you might not bring as many people in, drive as many people into the stores.” Companies could care less whether their ad dollars help or hurt free speech.

So long as Musk sticks to his principles, he’ll always be able to maintain a platform that is truly dedicated to free speech, whether controversial or not. But unless his suit gets some traction, he’ll have to do it without as much advertising.

Francesca Block is a reporter for The Free Press. Follow her on X @FrancescaABlock and read her piece “Is the Squad About to Shrink?”

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