Elon Musk's X platform has reached a settlement with a group of advertisers, bringing an end to the legal dispute. The lawsuit alleged that brands including Mars, Shell, Nestlé, and Lego unlawfully boycotted the social media platform.
In 2024, X Corp, the parent company of X, filed a lawsuit against multiple advertisers and the World Federation of Advertisers (WFA), an industry body, accusing them of colluding to withdraw billions of dollars in advertising spending from the platform. The advertisers denied the allegations, arguing that brands have the right to choose their advertising channels and should not be compelled to support a specific platform.
A federal judge dismissed the case in March of this year, but X Corp appealed in April. On Wednesday, X Corp and the WFA issued a joint statement saying they have "ended the relevant litigation dispute" and described the settlement as "reshaping the cooperative relationship between the two organizations." The specific terms of the settlement were not disclosed.
The settlement concludes Musk's most aggressive confrontation with the advertising industry. After Musk acquired Twitter for $44 billion in 2022, X's advertising revenue experienced a sharp decline.
The World Federation of Advertisers stated it will "reaffirm its commitment to free speech, a principle enshrined in the WFA's founding charter in 1953 and one that the WFA and X share." The federation added: "The World Federation of Advertisers and X agree that innovations in brand safety will benefit brands, platforms, and consumers alike."
X Corp's lawsuit pointed to advertising spending cuts linked to standards set by the Global Alliance for Responsible Media (GARM), an initiative under the WFA that comprises major brands and advertising agencies. The WFA established GARM in 2019 to "drive industry responses to illegal and harmful content on digital platforms and the challenge of monetizing such content through advertising."
On Wednesday, the federation announced it would not form or relaunch GARM or any similar industry alliance. In 2024, after Unilever resumed advertising on X, X Corp dropped its lawsuit against that company.
Advertising is a core revenue source for X, but since Musk completed the acquisition in 2022, the platform's revenue has significantly declined. Marketing executives have previously expressed concerns about brand advertisements appearing alongside harmful content and have criticized the platform's content moderation mechanisms.
At the time of filing the lawsuit, Musk posted: "We communicated amicably for two years, but received only empty words. Now, the war begins." The conflict between Musk and advertisers has a long history. After the acquisition, as ad revenue fell, he publicly directed harsh words at advertisers. Last year, X merged with his artificial intelligence company xAI, which subsequently integrated with SpaceX.
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