Elon Musk acquired Twitter (now X) almost two years ago. Since then, the social media platform has seen a significant decline in advertising revenue despite numerous promises and changes. In response to this, the company has taken legal action against several advertisers.
On Tuesday, the company filed a lawsuit against the Global Alliance for Responsible Media (GARM), a coalition representing brands responsible for 90% of global advertising spending. The lawsuit, filed in a Texas federal court, alleges that the coalition “conspired” with companies such as Unilever, Mars, and Ørsted to “collectively withhold billions of dollars in advertising revenue from Twitter.”
Talks of an Advertising Boycott
The 44-page document mentions that after Musk acquired the platform for $44 billion, the coalition expressed concerns to its members about Twitter’s compliance with brand safety standards. In the lawsuit, X’s lawyers state that compliance with brand safety standards is a condition for membership in the coalition.
X claims that it’s always complied with the standards, but regulators have observed an increase in misinformation and hate speech on the platform, contradicting the company's claim. The lawsuit also mentions that at least eighteen advertisers left the social media platform, while many others reduced their advertising budgets by 70% or more following GARM’s stance.
Ads on X.
In a public statement, X CEO Linda Yaccarino referenced a House of Representatives Judiciary Committee’s report that uncovered evidence of GARM and its members orchestrating boycotts to target platforms, content creators, and news organizations in an effort to deprive them of advertising revenue. X alleges that GARM has violated U.S. antitrust laws.
Considering X is now a privately held company, it’s not obligated to disclose its financial information to the public. Consequently, we don’t officially know the exact amount of money it’s earning. However, documents obtained by The New York Times suggest that the company’s revenue in the U.S was $114 million in the second quarter of 2024.
This indicates a 25% decrease from the first quarter of the year and a 53% decline compared to the same period last year. In contrast, in the second quarter of 2021, Twitter had reported revenues of $1.19 billion, with $1.05 billion coming from its advertising business. It’s clear that the company’s finances aren't in a good place.
This article was written by Javier Marquez and originally published in Spanish on Xataka.
Image | Ministério das Comunicações
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