Elon Musk loses big in court; X boycott perfectly legal

On Thursday, Elon Musk lost his lawsuit alleging that advertisers violated antitrust law by colluding on an ad boycott after he took over Twitter, gutted content moderation teams, and disbanded the Trust and Safety Council.

In her opinion, US District Judge Jane Boyle wrote that the lawsuit was dismissed because Musk failed to state a claim. His arguments that advertisers acted against their own best interests by avoiding advertising on his platform, now called X, did not plead facts showing that consumers were harmed. Without consumer harm, there can be no antitrust violation, the judge wrote, deeming the ad boycott perfectly legal.

“The very nature of the alleged conspiracy does not state an antitrust claim, and the Court therefore has no qualm dismissing with prejudice,” Boyle said. At one point, she emphasized, “the question underlying antitrust injury is whether consumers—not competitors—have been harmed.”

For Musk, the loss is likely significant. He had argued that advertisers should be “criminally prosecuted” after allies in Congress released a report claiming they were conspiring to tank Twitter’s revenue with the supposed goal of censoring conservative voices.

The lawsuit was also part of a larger “thermonuclear” legal fight that Musk started when he sued Media Matters for America for their reporting that he claimed prompted the boycott. That lawsuit remains ongoing but may be hobbled by the judge ruling that there was no illegal boycott.

As of this writing, Musk has not commented on the ruling, and X did not respond to Ars’ request to comment.

It seems likely, though, given Musk’s heated public statements about the litigation, that X will appeal.

X accused of “fishing expedition”

Musk’s recently dismissed lawsuit targeted the World Federation of Advertisers, as well as formerly major Twitter advertisers, including Shell, Nestle, Colgate, and Mars.

Analyzing the alleged conspiracy, Boyle makes it clear in her opinion that Musk seemingly did not realize ahead of purchasing Twitter how much power advertisers had gained over platforms by collectively agreeing on brand safety standards.

As advertisers explained in court filings, they had very little power over ad placements in social media’s early days. That’s why they created the Global Alliance for Responsible Media (GARM): They wanted more control over the content appearing around their ads.

By banding together through an advertiser-controlled initiative that platforms could join but not control, they could finally force platforms to honor their brand safety standards. They did that by sending letters threatening collective action if standards weren’t maintained. That seemingly agitated Musk when he got his first letter reminding him that Twitter was bound by GARM standards.

A subsequent email hinting that there had been “calls for boycotts” seemingly spooked Musk, who arranged a meeting to ensure Twitter wasn’t expelled from GARM.

Although that meeting went well, it didn’t end the boycott, which Musk said continues to this day. Ars chronicled the worst impacts a year into the boycott. At its lowest, the platform’s revenue was down by as much as 59 percent “for the five weeks from April 1 to the first week of May” in 2023, The New York Times reported.

Frustrated that the peace talks didn’t end the way he wanted and complaining that the platform had to reduce ad prices just to stay afloat, Musk then sued.

There are many ways that Musk’s antitrust claims could have succeeded, Boyle noted. He could have argued that the boycott prevented X from competing with other social media companies to “corner the supply against users’ interests.” Or that advertisers were somehow motivated to help a rival platform raise ad prices to exclude X from that market. Or possibly show that the World Federation of Advertisers intended to shut X out in order to launch its own social media ad business.

But his only attempt to allege that consumers were harmed by the boycott was a claim that reduced revenue made it harder to improve the platform’s functionality. And that wasn’t enough to claim that advertisers violated antitrust law, Boyle wrote.

“The conspiring advertisers here did not attempt to force X to advertise with only GARM advertisers so that they could control the social media advertising market or any other market,” Boyle wrote. “They merely decided that they would not buy from X for their own advertising need.”

In her opinion, Boyle noted that Musk also failed to show that advertisers had worked together to boycott then-Twitter. Advertisers argued that they made independent business decisions based on their own brand safety concerns, and there was no evidence to suggest they were lying.

“Mere affiliation with GARM and its wide-ranging activities does not support a connection to the boycott against X,” Boyle wrote. Later, she concluded that “X simply has not alleged facts supporting the conclusions it wishes to draw.”

Boyle was also troubled by Musk’s attempted “fishing expedition” pushing for broad discovery early on in the lawsuit. Musk sought “sprawling information” from defendants about their general involvement in GARM “rather than specific to the boycott against X,” she wrote.

Ars could not immediately reach the World Federation of Advertisers to comment on what the win could mean for GARM, which was suspended in 2024 as a result of the lawsuit, CNBC reported.