X uses legal threats to pressure brands back to platform as ad boycott drags on

X uses legal threats to pressure brands back to platform as ad boycott drags on

Facing a battered advertising business, X, the social media platform formerly known as Twitter, has launched an aggressive legal and pressure campaign to drive major brands back to the platform—with some success. The company, under Elon Musk’s ownership, has used threats of lawsuits and hardball tactics to persuade companies including Verizon, Ralph Lauren, Unilever and Amazon to resume ad spending, the Wall Street Journal reported.

The effort is part of X’s broader push to stem revenue losses after Musk’s controversial overhaul of the platform led to an exodus of corporate advertisers concerned about content moderation. Musk and X CEO Linda Yaccarino have accused some advertisers of illegal collusion to boycott the platform and have sued the World Federation of Advertisers and others under antitrust laws.

“This type of activity may be common on Nanjing Road in China, but absolutely not at all common on Madison Avenue,” said Greg Paull of consulting firm MediaSense.

Legal threats yield results

In recent months, X’s lawyers warned several major advertisers that they could be added to the platform’s antitrust lawsuit unless they resumed buying ads. Verizon, which hadn’t advertised on X since 2022, agreed to spend at least $10 million this year after receiving such a warning, according to people familiar with the matter. Ralph Lauren and Unilever also struck new ad deals with X after similar pressures.

At least six companies have reached agreements with X following lawsuit threats or related pressure, according to people familiar with the negotiations. The deals include both binding and nonbinding ad spending targets.

A climate of fear among advertisers

Advertisers and agencies describe an atmosphere of uncertainty and legal anxiety. “Advertisers are understandably concerned about the litigious streak of Musk’s X, interpreted by some as ‘invest with us, or else,’” said Ruben Schreurs, CEO of ad consulting firm Ebiquity.

Pinterest, Lego and Twitch were among companies that resisted X’s demands and were later added to its antitrust lawsuit. Meanwhile, X has used subpoena power in a separate suit against Media Matters to demand internal communications from top ad agencies such as Omnicom, WPP, and Publicis.

Some agency executives fear that failing to cooperate with X could invite legal headaches or retaliation. Others are attempting to negotiate protective clauses into ad agreements, though X has resisted.

Ties to political pressure

The platform’s pressure campaign has also drawn political backing. Musk reportedly complained to US Rep. Jim Jordan (R., Ohio) that advertisers were unfairly boycotting X, prompting Jordan to subpoena the Global Alliance for Responsible Media. Musk and Jordan’s interactions have added to advertisers’ unease about the political dimensions of the pressure.

Though the antitrust case faces legal hurdles—experts say advertisers’ choices not to be associated with certain content likely do not violate antitrust laws—X’s tactics have forced many companies to return to the platform or face the risk of drawn-out litigation.

Revenue rebounds—slowly

X’s ad revenue has rebounded slightly after dropping from $4.6 billion in 2022 to about $2.6 billion last year. Research firm Emarketer projects growth this year, though revenue is expected to remain below pre-Musk levels.

Some brands have been attracted back to X in part by the platform’s new brand safety tools and opportunities to advertise near premium sports content such as NFL and NBA highlights. Others, like Amazon, returned after complex negotiations, which included X leveraging unpaid cloud services bills during talks with Amazon Web Services.

Despite recent gains, X’s hardball approach is likely to continue fuelling tensions with both advertisers and Washington regulators. The US Federal Trade Commission is now investigating whether ad groups violated antitrust laws in connection with coordinated boycotts of X and other platforms.

Musk himself remains deeply engaged in the fight. “I need to defeat Media Matters,” he wrote in a November 2023 text message viewed by The Wall Street Journal, underscoring the personal stakes he sees in X’s legal and business battles.