Elon Musk’s X is intensifying its legal battles by suing Amazon-owned Twitch for allegedly not advertising on the social media platform. The lawsuit claims Twitch, along with former members of the Global Alliance of Responsible Media (GARM), is part of an illegal conspiracy to boycott advertising on X since late 2022.
This development follows X’s original lawsuit filed in August against brand members of GARM, an initiative that recently disbanded. X asserts that the boycott caused significant financial harm, claiming “billions of dollars in advertising revenue” were withheld.
Twitch was added to the lawsuit on Monday, with X’s amended complaint highlighting that the platform has reportedly not run ads on X since November 2022. Key to this claim is a document from GARM that includes an endorsement from Twitch concerning its brand safety standards.
X’s struggle with ad revenue is compounded by declining advertiser confidence, following a drastic drop in revenue by nearly 40% in the first half of 2023. This downturn coincided with Musk’s controversial comments about advertisers to CNBC Television, including urging them to “go f*** yourself,” which followed significant brands such as Disney and Apple halting ad purchases due to Musk’s endorsement of antisemitic conspiracy theories.
Recent reports indicate that the ad spend from X’s top 100 advertisers has barely increased, up only one percent from the previous year, while it remains down 64% from 2022.
Ongoing challenges for X
The impact of the alleged advertising boycott isn’t the only hurdle X faces. Reports reveal a decline in active users across important markets, including the U.S., UK, and EU.
Since Musk’s involvement in Donald Trump’s reelection, X has experienced a user exodus, while competitors like Bluesky and Threads have gained millions of new users. Despite some advertisers returning, their spending remains substantially lower than before.
X’s legal strategy appears to be an effort to recover lost revenue and restore confidence among advertisers in hopes of turning around its fortunes. The inclusion of Twitch in the lawsuit reflects the broader challenges faced by the platform in the wake of recent controversies and economic pressures.
Advertising on X
As the legal process unfolds, the effectiveness of X’s claims remains uncertain. The World Federation of Advertisers (WFA) has indicated an intention to contest the allegations in court, despite GARM’s discontinuation. Challenges extending from brand boycotts, diminished user engagement, and heavy revenue losses create a complicated environment for X moving forward.
With Musk’s company also embroiled in separate legal actions against Media Matters for highlighting ads next to antisemitic content, the ramifications from these lawsuits continue to ripple throughout X’s advertising market.
The situation signifies a critical juncture for X, where reputational damage and intense scrutiny may dictate future revenue opportunities.
X’s ongoing legal disputes and the associated fallout could set significant precedents in how advertisers engage with the platform in a post-boycott landscape. As the situation develops, Musk’s strategies to reclaim advertisers’ trust will be closely monitored in the industry’s shifting dynamics.
The combination of legal battles, fluctuating advertiser relationships, and user engagement issues offers a complex picture that will likely evolve in the coming months as the implications of these challenges become clearer.
Featured image credit: Riki32/Pixabay
