X, formerly known as Twitter, sued a group of advertisers alleging they coordinated an illegal advertising boycott against the social media company.
The suit was filed Tuesday in the United States District Court for the Northern District of Texas Wichita Falls Division. World Federation of Advertisers, Unilever, Mars, CVS Health Corporation and Ørsted A/S are named as defendants.
The Deseret News contacted a communications person at each company and did not receive an immediate response.
“This is not a decision we took lightly, but it is a direct consequence of their actions,” said X CEO Linda Yaccarino in an open letter to advertisers.
One of the central components of the suit deals with an initiative from the World Federation of Advertisers known as the Global Alliance for Responsible Media. It was the subject of a recent House hearing.
WFA spokesperson Will Gilroy told Fox News Digital this week that the allegations made by the House Judiciary Committee were unfounded.
“Membership of GARM is entirely voluntary. Its frameworks and tools are intentionally broad, and individual companies are free to review, adopt, modify, or reject them, as they see fit,” Gilroy said. “The decision where and when to advertise is always down to the individual advertiser, in collaboration with their agency partners where relevant.”
Through this initiative, the suit claimed defendants conspired to withhold billions of dollars in advertising revenue from Twitter.
What did the suit claim?
“Concerned that Twitter might deviate from certain brand safety standards for advertising on social media platforms set through GARM, the conspirators collectively acted to enforce Twitter’s adherence to those standards through the boycott,” said the filing.
The suit said those who participate in the Global Alliance for Responsible Media agree to adopt its brand safety standards. After Elon Musk acquired Twitter, the suit said GARM “conveyed to its members its concerns about Twitter’s compliance with GARM’s standards, triggering the massive advertiser boycott that followed.”
After this happened, the suit said defendants and dozens of nondefendant companies either stopped advertising on Twitter entirely or substantially pulled back from doing so.
“These actions were all against the unilateral self-interest of the advertisers; they made economic sense only in furtherance of a conspiracy performed in the confidence that competing advertisers were doing the same,” alleged the suit.
The suit alleged GARM celebrated the impact this had on Twitter.
“The boycott and its effects continue to this day, despite X applying brand safety standards comparable to those of its competitors and which meet or exceed those specified by GARM,” stated the suit.
X in the filing argued the collective action among this group of advertisers allows the interests of those advertisers to override the interests of consumers.
It also claimed it was not in the best interest of companies’ need to advertise, either.
“Due to the boycott of Twitter, prices charged by Twitter for advertising declined substantially beginning in November 2022 and remain well below those charged by X’s closest competitors in the social media advertising market,” said the suit. “By refraining from purchasing advertising from X, boycotting advertisers are forgoing a valuable opportunity to purchase low-priced advertising inventory on a platform with brand safety that meets or exceeds industry standards.”
This also dissuades other social media companies from lowering their prices for advertising, said the suit.
In its section on the nature of the case, the suit quoted directly from the aforementioned House report, “The extent to which GARM has organized its trade association and coordinates actions that rob consumers of choices is likely illegal under the antitrust laws and threatens fundamental American freedoms. The information uncovered to date of WFA and GARM’s collusive conduct to demonetize disfavored content is alarming.”
X said it would like a jury trial.
“We have met and surpassed the requests made by advertisers and groups such as GARM for new tools, both to improve advertiser controls and the effectiveness of our products to drive increased value for our customers,” said Yaccarino, adding the company feels compelled to seek a remedy given the situation.