Some advertisers return to avoid suits, but Lego and Pinterest rebuffed threats.
Elon Musk’s strategy of suing or threatening to sue companies that don’t buy advertising on X has reportedly paid off in at least a few cases. A Wall Street Journal report yesterday said that Verizon and other companies started advertising on X after lawsuit threats.
X sued some advertisers last year over what it claims is an illegal boycott and reportedly threatened to add other companies to the lawsuit if they didn’t buy ads. The WSJ article said that Verizon, which hadn’t advertised on X since 2022, was told late last year that it would be added to the lawsuit if it didn’t buy ads. Verizon subsequently pledged to spend at least $10 million on the platform this year, the article said.
“Fashion company Ralph Lauren also agreed to resume buying ads on X after receiving a lawsuit threat, people familiar with the matter said,” according to the report. “All told, at least six companies that had either received lawsuit threats or were motivated in part by pressure tactics have struck ad deals with X, according to people familiar with the negotiations. The agreements include both firm ad-spending commitments and nonbinding targets.”
After X threatened to sue Verizon, negotiations ramped up, and X CEO Linda Yaccarino “touted X’s improvements regarding brand safety tools and new ad formats,” the WSJ wrote. The article said Verizon’s $10 million in ad spending “could rise to $25 million if the initial ad effort performs well and ads don’t appear near content that Verizon deems inappropriate.” But Verizon’s spending on X would still be well below the $80 million it reportedly spent on Twitter in 2020, two years before Musk bought the social network.
Legal case weak but works as pressure tactic
X’s legal case against advertisers is a weak one, law professors told Ars last year, but it has achieved some success as a pressure tactic. X sued advertisers in US District Court for the Northern District of Texas, a venue that Musk likes so much that he updated X’s terms of service to require any user lawsuits in federal court to be filed there.
Amazon-owned Twitch was dropped from X’s lawsuit in May this year after a deal between the companies. No details on the deal were provided at the time, but it was reported in January that Amazon was ramping up its ad spending on X.
Yesterday’s Wall Street Journal article provides a few more details on Amazon’s decision to increase spending on X. It says there were “months of negotiations that involved Amazon Chief Executive Andy Jassy.”
The Journal cited one person familiar with the matter as saying the Twitch lawsuit “didn’t factor into Amazon’s decision to ramp up spending on X.” It turns out that Musk’s failure to pay vendors that provided services to Twitter has played a role in ad negotiations. The WSJ story suggests that X told Amazon it would pay its unpaid cloud computing bills in exchange for ad spending:
People close to X said the platform pressed vendors that were supplying it with goods or services to spend money on advertising. X is a customer of Amazon Web Services, its cloud-computing unit, and had past-due bills for that. X used those unpaid bills as leverage during negotiations, according to people familiar with the matter.
At its peak, Amazon had spent around $100 million a year on advertising on X, according to a person familiar with the matter, far more than it is currently spending.
We contacted X, Verizon, and Amazon today and will update this article if we get any comments.
Lego and Pinterest got sued after rebuffing threats
X’s threats did not work on Lego and Pinterest, the Journal wrote. Lego and Pinterest were added to X’s lawsuit in February. “Lego was added after it rebuffed a demand to spend more on X,” and the same thing happened to Pinterest, the Journal wrote.
“In calls to Pinterest’s legal team in January, a lawyer for X demanded that the company commit to its pre-takeover spending level for two years or face legal action, said a person familiar with the conversations,” the article said. “Pinterest decided not to do so after having bought ads on other platforms that it concluded delivered stronger results than X, that person said.”
Many advertisers left or reduced spending after Musk bought Twitter, largely because of changes to content moderation. Musk inflamed the situation further in late 2023 when he posted a favorable response to an antisemitic tweet and subsequently told wary advertisers to “go fuck yourself.”
Advertisers have felt pressured to spend at least small sums on X given Musk’s influence in the Trump administration. Musk’s recent rift with Trump could make advertisers less willing to cave to X’s demands. But advertisers are still facing pressure from the US government as the Federal Trade Commission is investigating whether advertising and advocacy groups violated antitrust law by coordinating boycotts.
While X’s revenue dropped from $4.6 billion in 2022 to $2.6 billion in 2024, the Journal reported that research firm “Emarketer projects that X’s ad revenue will grow this year for the first time since Musk took control. However, it’s expected to remain below its pre-Musk level.”
Jon is a Senior IT Reporter for Ars Technica. He covers the telecom industry, Federal Communications Commission rulemakings, broadband consumer affairs, court cases, and government regulation of the tech industry.
