Elon Musk:
Don’t advertise
If somebody’s going to try to blackmail me with advertising, blackmail me with money, go f-ck yourself.
Go f-ck yourself. Is that clear? I hope it is.

Simone Del Rosario:

That was X owner Elon Musk 9 months ago. But this week, the company is sending a much different message to advertisers.

Linda Yaccarino:
I was shocked by the evidence uncovered by the House Judiciary Committee that a group of companies organized a systematic illegal boycott against X. It is just wrong.

Simone Del Rosario:

X filed a federal antitrust suit against an advertising trade group and four of its members.

The companies, which include CVS Health and M&M-maker Mars Inc, were part of the “Global Alliance for Responsible Media,” a nonprofit that helped “advertisers avoid inadvertently supporting harmful and illegal content.”

I say all this in the past tense because X sued the nonprofit into oblivion. Following the lawsuit, the World Federation of Advertisers announced GARM would be shutting down.

Linda Yaccarino:

These organizations targeted our company and you, our users. The evidence and facts are on our side. They conspired to boycott X which threatens our ability to thrive in the future.”

Simone Del Rosario:

When Musk bought the social site, he promised to loosen restrictions to adhere to his free speech absolutist beliefs. The site faced criticism of allowing hate speech and false content on the platform. Musk welcomed back a number of users who had been banned from Twitter in the platform’s previous life.

Despite his firm stance on advertisers:

Elon Musk:

Go f-ck yourself.

Simone Del Rosario:

Musk suspected something fishy was going on when they didn’t buy ads on his site. So he lobbied Congressman Jim Jordan and other conservative lawmakers to look into the trade group’s practices.

Eventually Jordan subpoenaed GARM for documents to prove an anti conservative bias. And last month it issued a report called “Garm’s Harm: How The World’s Biggest Brands Seek to Control Online Speech.”

But how does a group of advertisers deciding a website is not fit to advertise equate to anti-competitive practice?

Doug Melamed:

“They’re making, ultimately, a very simple argument.”

Simone Del Rosario:

We turned to the Michael Jordan of antitrust Doug Melamed, who brought a successful antitrust case against Microsoft back in the 1990s.

He says X’s argument would essentially be that of price fixing.

Doug Melamed:

Let’s take a more simple story,” Melamed told Straight Arrow News. “Suppose a bunch of customers, let’s say supermarkets, got together and said to the Coca Cola company, ‘we’ve agreed that we’re not going to distribute any products sold in bottles smaller than 20 ounces.’ I think that would probably be the antitrust violation. Even though they didn’t specify the price, they specified an important term of the contract between the buyer and the seller. And competing buyers shouldn’t do that.

Simone Del Rosario:

Musk’s lawsuit claims 18 brands stopped advertising on Twitter from November to December 2022, and dozens more that are were part of the coalition cut back on ad spending in 2023.

The company’s outspoken owner posted, “We tried peace for 2 years, now it is war.”

Doug Melamed:

I think he has a plausible case. I don’t know what he’ll be able to show in terms of real damages, but he has a plausible case because of the kind of theory I’ve just tried to paraphrase might have some traction in an antitrust context.

Simone Del Rosario:

Melamed says there’s still a high burden of proof. If advertisers had just agreed on a code of best practices and could still operate independently and advertise with X, then it wouldn’t really pass antitrust muster.

Doug Melamed:

But if they agreed, we won’t put ads on X until they change in the following specific ways, then I think there is an agreement that probably on the face of it, would suggest some antitrust concern.

Simone Del Rosario:

He says it’s harder to imagine how the advertisers’ actions harm competition between X and other sites.

Doug Melamed:

Because even if the implication is that these companies might wind up spending a little more advertising on other platforms, [and] I’m not sure that’s true at all. But even if it were true, it’s probably not enough to change the basic structure of the market.

Simone Del Rosario:

Conservative social media platform Rumble joined in on X’s fight against GARM this week.

Chris Pavolvski:

If they don’t like what some speech might happen on Rumble or X, they can say, we’re not going to touch that. Which then causes advertising rates to go higher because now they’re only accessing a certain portion of the market and then drives higher prices for their shareholders and their brands.

Simone Del Rosario:

And GARM’s decision to fold won’t change the pursuit.

Doug Melamed:

It won’t make the case go away, because they’re potentially liable for the conduct in the past, but it will certainly affect whatever remedies the court might issue, affect the likelihood of other lawsuits, and maybe they’re hoping it will kind of take some of the sting out of the motivation for Musk to pursue it.

Simone Del Rosario:

Melamed says if Musk were to win his case, the typical result would be an injunction warning advertisers never to agree to these things again.

The next remedy could be a claim for damages.

Doug Melamed:

I doubt that X is going to be able to prove that all of those dollars that they claim they would have gotten and that Musk doesn’t care about ––– would have come to them had they decided independently whether to advertise for them.

Simone Del Rosario:

X says the advertiser “boycott and its effects continue to this day, despite X applying brand safety standards comparable to those of its competitors.”