Elon Musk’s X Sues Twitch and Others Over Alleged Ad Boycott Amid Revenue Woes
Elon Musk's X (formerly Twitter) has intensified its legal battle against advertisers, now adding Amazon-owned Twitch to its lawsuit. The platform alleges that Twitch and other former members of the Global Alliance of Responsible Media (GARM) illegally conspired to boycott X following Musk’s acquisition of the platform in late 2022.
The Allegations Against Twitch
X’s lawsuit, originally filed in August, accuses GARM members of coordinating an advertising boycott. It claims Twitch hasn’t advertised on X in the U.S. since November 2022. Documents cited in the lawsuit include references to an "executive endorsement" from Twitch of GARM's brand safety measures.
While GARM has since been disbanded by its parent organization, the World Federation of Advertisers (WFA), the WFA has vowed to contest X’s allegations in court. X has already dropped Unilever from the suit after reaching a private settlement.
X’s Struggles with Advertiser Confidence
The lawsuit underscores ongoing struggles for X, which has seen a sharp decline in ad revenue since Musk took the helm. According to internal documents revealed in June 2024, X’s revenue dropped by nearly 40% in the first half of 2023.
This slump was exacerbated by Musk’s controversial public comments, including his explicit dismissal of advertisers who boycotted X in November 2023. High-profile brands like Disney and Apple had already withdrawn from the platform, citing concerns about antisemitic content and advertisements appearing alongside extremist posts.
Despite some advertisers returning after Donald Trump’s election win, spending levels remain far below pre-boycott figures. Sensor Tower reports that ad spend from X's top advertisers is down 64% compared to this time in 2022, reflecting the enduring impact of the boycott.
User Exodus and Growing Competition
The challenges extend beyond advertisers. X has seen declining daily active users in major markets like the U.S., UK, and EU. Its political alignment with Trump has further alienated segments of its user base, prompting a migration to rival platforms like Bluesky and Threads.
Outlook for X
As X pursues its legal claims against Twitch, Mars, CVS Health, and others, the platform faces an uphill battle to rebuild trust with advertisers and stabilize its revenue streams. Even a legal victory may do little to reverse the larger trends impacting X's growth and profitability.