Social media platform X, owned by Elon Musk, has added Amazon’s Twitch to its lawsuit against several former advertisers as they fought back against an advertising boycott that led to a sharp revenue drop. Now, turning on an even deeper advertising pool of companies, the legal drama seeks to get these companies to pay billions in advertising dollars, which has been withheld since Musk acquired X (a former name for Twitter).
Initially filed in August, X’s lawsuit alleged that the World Federation of Advertisers, CVS Health, Mars, and Danish renewable energy company Orsted had conspired with others to suppress advertising revenue through a “group boycott.” Musks’ amended lawsuit, submitted on Monday in Wichita Falls, Texas, formally included Twitch as a defendant, claiming that the platform’s absence from the advertising roster considerably impacted X’s financial woes.
Elon Musk’s X sues Twitch and former advertisers over ad boycott fallout
Twitch, for instance, avoided running ads across X after Musk’s purchase last November. The lawsuit references a GARM document indicating Twitch’s “executive endorsement” of the group’s brand safety standards, heightening the stakes for the live-streaming giant. The addition also follows X‘s agreement with Unilever, which dropped them from the lawsuit after the deal closed, at least for now.
The original lawsuit claimed up to “billions of dollars” in potential revenue loss, arguing that these companies’ concerted efforts violated U.S. antitrust laws by significantly disrupting the flow of advertising to X. The coalition, GARM, is linked to the boycott and has been disbanded from the World Federation of Advertisers, which promised to take X to court, ensuring a long legal standoff.
X strikes back: Twitch added to Musk’s billion-dollar ad boycott lawsuit
While X’s advertising revenue is chaotic, the underlying problems are far worse. Advertisers feared that their brands would appear next to hateful content, racist posts, and all the abating moderate content that Musk had gotten rid of in the wake of his acquisition. This unease led many to withdraw their advertising spend, and X’s revenue plummeted nearly 40 percent in early 2023, indicating a stark decline during Musk’s ownership.
But lately, some of the advertisers that had crawled back in the last few weeks have been doing so to try and tie up with Musk after Donald Trump’s victory, but the revenue numbers are still depressing. Meanwhile, Sensor Tower says X’s top 100 advertisers spent a measly one percent more on ad investment than they did in 2022 and, as a whole, are still down a whopping 64 percent from 2022.
Amidst all these, X also faces a steady decrease in its daily active user base in key markets such as the U.S., U.K., and EU. This amplifies already troubled times for X, as reports indicate users are migrating to competitors like Bluesky and Threads. Including Twitch in the lawsuit only adds to Musk’s difficulties and shows advertisers’ more difficult struggle as the social media landscape evolves.
X’s ongoing legal fights against Twitch and other advertisers are a sign of a battle to recover lost revenue in an increasingly frazzled industry grappling with brand safety and content moderation conundrums. Each legal step forward in restoring advertiser confidence might undo Musk’s chaotic new era at the helm of X.
Image credits: Furkan Demirkaya/Flux AI
