With all the problems Tesla is facing, it can be easy to forget that Elon Musk is fighting other battles. He’s currently in the throes of a vicious lawsuit involving one of his other companies.
When Musk finalized his acquisition of Twitter, now called X, in October 2022, it sparked a backlash that extended beyond the platform’s users. Many people deleted their accounts in protest of Musk’s beliefs on certain topics, but some companies also took a stand against him.
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In the months that followed his takeover, a large number of companies halted advertising on X amid reports of offensive content and declining user activity. This included prominent companies such as Lego, Shell, and Nestlé, to name just a few.
Musk responded with a lawsuit against these former clients, alleging that they had illegally boycotted his platform. However, the defendants have hit back with some strong words.
Image source: Apu Gomes/Getty Images
Former X advertisers are letting Musk know exactly how they feel
Even before Musk assumed control of what would become X, some people raised concerns about what it would mean for the platform. For some, it meant a likely mass exodus of users, as many people have expressed concern that Musk would create a hostile environment, despite his claims to support free speech.
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It didn’t take long for advertising clients to start walking away, though, nor for Musk to feel the impact. One year later, the platform’s advertising revenue had reportedly plunged by roughly $1.5 billion, described by a source as a “significant slump from prior years.”
From Musk’s perspective, the decision to stop advertising on X seemed to be a deliberate conspiracy orchestrated by a group of companies with illicit intentions. As he put it, their actions resulted in X ending up “a less effective competitor to other social media platforms in the sale of digital advertising and in competing for user engagement on its platform.”
In July 2024, Musk posted to X that his company would be filing a lawsuit against the companies that had boycotted advertising on his platform, saying he hoped some states would consider prosecuting them criminally.
Musk’s case alleges that these companies had joined an initiative titled Global Alliance of Responsible Media (GARM), which could be seen as conspiring to “collectively withhold billions of dollars in advertising.” Created in 2019 to promote digital safety as part of the World Federation of Advertisers (WFA), GARM has not been active since August 2024.
The companies on the other end of Musk’s lawsuit recently filed a joint motion to have the case dismissed quickly. They described his legal action against them as “an attempt to use the courthouse to win back the business X lost in the free market when it disrupted its own business and alienated many of its customers.”
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In this blunt statement, the companies allege that Musk is responsible for the business his company lost and that their decisions to stop advertising on his platform are perfectly justified in a free market economy.
Musk is challenging a group that isn’t backing down
In the most recent filing, these companies asserted that the decision to stop advertising on X is protected by their First Amendment rights. It notes that while antitrust law does protect competition within a market, it doesn’t protect companies like X from competition, despite what Musk seems intent on claiming.
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Business Insider provides further context on the challenge to Musk’s lawsuit that these brands have issued, stating:
“In Wednesday’s filing, the WFA and the group of brands rejected the accusations of a conspiracy and said that advertisers — including non-GARM members — made their own individual decisions about pulling ad spend from X. It noted that X’s own lawsuit said just 18 of GARM’s more than 100 members stopped advertising on the platform.”
It remains uncertain whether the case will be dismissed or Musk’s lawsuit against these companies will proceed. However, given the precedent set by the First Amendment of the U.S. Constitution, which protects individual liberties, it seems unlikely that a judge will rule in Musk’s favor.
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