Elon Musk’s X sues Twitch in lawsuit alleging advertisers conspired to boycott the platform
X owner Elon Musk has clashed with advertisers since taking over the platform, formerly known as Twitter.
Elon Musk’s X is suing Twitch, alleging that the Amazon-owned video streaming platform and other companies illegally conspired to boycott advertising on the platform formerly known as Twitter.
Twitch was added as a defendant on Monday to the complaint, originally filed in August this year. The complaint accuses members of the Global Alliance of Responsible Media, a now-discontinued initiative that was led by advertising trade body the World Federation of Advertisers, of illegally colluding to “collectively withhold billions of dollars in advertising revenue” from Twitter.
GARM, a small non-profit initiative that created common industry definitions and voluntary frameworks around areas like brand safety and hate speech, was forced to shut down days after the suit was filed. The WFA, which is still contesting the suit, said at the time it lacked the resources to continue GARM’s operations amid the intensive legal battle.
Twitch, X, and the WFA didn’t immediately respond to requests for comment made by B-17 outside normal US business hours.
Stephan Loerke, CEO of the WFA, said in August that the advertising body and GARM intended to contest the allegations in X’s suit in court and were confident the outcome of the case would “demonstrate our full adherence to competition rules in all our activities.”
The addition of Twitch as a defendant to the suit indicates that X has no plans to de-escalate its legal fight against boycotting advertisers — despite claiming victory over GARM’s closure.
Unilever was also a defendant in the original complaint but was dropped from the lawsuit in October. The official “@XNews” account said the companies “had reached an agreement with Unilever” and that it would “continue our partnership with them on the platform,” without specifying the nature of the agreement. Unilever has declined to comment on the matter.
Some people in the industry had speculated that X would seek similar settlements with other defendants in the case as it looks to rebuild its ad business; instead it’s found another advertiser to attempt to bring before the Texas court.
The amended lawsuit alleges that at least 18 GARM members — including the defendants in the case: Mars, CVS Health, the energy company Ørsted, and now Twitch — stopped running ads on Twitter between November and December of 2022.
“Defendants Mars, Ørsted, Twitch, CVS Health and other GARM-member advertisers acted in parallel to discontinue their purchases of advertising from Twitter, in a marked departure from their prior pattern of purchases,” the lawsuit says.
In the case of Twitch, X’s lawsuit claims the company has bought no ads on the platform in the US and has only spent a small amount elsewhere in the world since November 2022. The lawsuit cites a GARM document that claims GARM’s brand safety standards had received “executive endorsement” from Twitch.
X ad revenue decline
Since Musk’s takeover of Twitter in 2022, ad revenue on the platform has plummeted. Large advertisers were dissuaded from using the platform after Musk fired hordes of its sales and safety staff and brought back previously banned accounts. Musk’s own behavior on and off the platform — including famously telling advertisers who boycotted X to “go fuck yourself” — hasn’t encouraged advertisers to place their budgets there, either.
Even pre-Musk, Twitter was not seen by many advertisers as a “must buy” compared to platforms like Meta and Google, which have bigger audiences and more sophisticated advertising technology.
Many ad insiders, legal experts, and casual observers think the claims made in X’s lawsuit are baseless but have nonetheless raised concerns that such legal action is distracting, can damage companies’ corporate reputations, and negatively impact industry efforts to improve the advertising ecosystem. Dozens of advertisers are also dealing with document requests from Jim Jordan, R-Ohio, chair of the House Judiciary Committee, about their involvement with GARM.
Elsewhere, the video site Rumble has sued the WFA, WPP and its GroupM ad buying agency, and spirits giant Diageo, alleging they collectively agreed to restrict advertising on social platforms, including Rumble.
Some advertisers have been trickling back to X, a trend some industry consultants have speculated could be related to Musk’s rising political power following Donald Trump’s US election win. There was an 800% bump in US ad spend from X’s top 100 advertisers in the week following November 6, according to data analyzed by market intelligence firm Sensor Tower.
Abraham Yousef, Sensor Tower vice president of research and insights, said this was a “very significant” lift, given that X’s top 100 advertisers only marked a 1% increase in spend on average in the same week in 2023. However, despite this inflection point, the top 100 advertisers on X spent 64% less this year than the same week in 2022, “suggesting that it has yet to fully recover advertiser demand to pre-acquisition levels,” Yousef added.
