Elon Musk, the billionaire owner of Tesla, Space X and what was Twitter, made it clear in November that if advertisers didn’t like what he was doing on X, they should be looking elsewhere.

“I hope they stop. Don’t advertise,” he said.

“If someone is going to blackmail me with advertising, blackmail me with money, then go f— yourself.”

Less than a year later, Musk is suing a group of advertisers for what X CEO Linda Yaccino called “an illegal boycott against many companies, including X”.

“X has filed an anti-trust lawsuit against the Global Alliance for Responsible Media (GARM), the World Federation of Advertisers (WFA), and GARM members CVS Health, Mars, Orsted and Unilever,” she said in an open letter.

“The illegal behaviour of these organisations and their executives cost X billions of dollars.”

GARM is a union between the world’s major brands and is responsible for 90 per cent of the world’s marketing spend.

It has encouraged companies to avoid advertising on X since Musk’s takeover, sparking anger from the billionaire.

WFA is a Brussels-based organisation that oversees GARM.

Factors and risk

Mark Uncles, a professor of marketing from UNSW Business School, said that companies will be making decisions on where to advertise based on two factors.

“There’s an economic factor that may be behind this. If you’re a major brand like Unilever, you’re going to want to use the advertising channel that is going to give you the appropriate reach with the target audience,” he said.

“The other argument I would call the fit argument: If you like the values of the channel as indicated by the owner, the editorial policies and the content of the channel.”

Advertisers fled X because of reports that advertising for major brands was being displayed next to white supremacist and antisemitic material, resulting in plummeting revenue for the company.

When media watchdog Media Matters highlighted this, Musk also announced a lawsuit against it that will head to trial in April.

Uncles said that at the centre of the lawsuit is “the right of any organisation to choose where to advertise”, including individual social media sites.

“Digital advertising is extremely strong and it has been on a 25-year upward trajectory, but it is quite fragmented,” he said.

“It’s almost hyper-choice that is available, especially to large organisations who would have big advertising budgets.”

Other than X, digital spending on advertising across social media continues to be strong. Photo: Getty

The report

At the heart of the lawsuit is a report by the House Judiciary Committee in America, chaired by Jim Jordan, a close ally of Donald Trump who has also been accused of covering up sexual misconduct before his time in Congress.

The preliminary report, released in July, found “the extent to which GARM has organised its trade association and co-ordinates actions that rob consumers of choices is likely illegal under the anti-trust laws and threatens fundamental American freedoms” based on emails examined by the committee.

Uncles said it can be difficult to decipher who is making the decision on where to spend advertising money, particularly at large companies like Unilever and Mars.

“Many of these decisions, if not the majority, are based on price or cost,” he said.

“There is the company itself who clearly has a view here, but there are also media buyers, sellers and intermediaries.”

Rumble, a website promoted as an alternative for those banned on YouTube, also launched a similar suit against advertisers.