Social media platform X, owned by Elon Musk, is currently facing a significant loss in advertising revenue due to recent controversies. According to a report by The New York Times, X is potentially looking at a downturn of up to $75 million by the end of the year as major advertisers reconsider their engagement with the platform.
The decline in advertising revenue comes after Musk endorsed an antisemitic post on the platform, leading prominent companies like Walt Disney and Warner Bros Discovery to temporarily halt their advertising campaigns on X. Internal documents reveal that more than 200 ad units from companies such as Airbnb, Amazon.com, Coca-Cola Company, and Microsoft Corporation are reevaluating their advertising strategies on X. On Friday, the platform announced that $11 million in revenue was at risk, with the figure fluctuating as some advertisers returned and others increased their spending.
Since Musk took over X in October 2022, the platform has seen a reduction in content moderation, resulting in a rise in hate speech, as reported by civil rights groups. This lack of moderation has sparked concerns among advertisers, leading them to reassess their association with X.
According to the documents reviewed by The New York Times, over 100 brands have “fully paused” their advertisements, while several others are at risk of doing so. The majority of these companies took action on or after November 15, when Musk asserted on X that a conspiracy theory alleging Jewish support for the immigration of minorities to replace white populations was “the actual truth.”
The decline in advertising revenue is significant for X, as the company recorded $1.57 billion in revenue in the last three months of 2021, with nearly 90% of that coming from advertising. The change in content moderation has resulted in a marked decline in U.S. ad revenue, dropping at least 55% year-over-year each month following Musk’s acquisition.
In response to the negative publicity and pullback of advertisements, X has launched a lawsuit against Media Matters, a media watchdog, accusing them of defamation. The lawsuit claims that a report falsely associated major brand advertisements, including those from Apple Inc. and Oracle Corporation, with content promoting hate speech. This legal action is part of X’s efforts to address the negative publicity and regain advertising support.
The situation highlights the importance for social media platforms to prioritize content moderation and ensure that hate speech and harmful content are effectively addressed. Advertisers are increasingly conscious of their brand image and are willing to withdraw their support from platforms that do not meet their standards. Moving forward, X will need to take steps to regain advertisers’ trust and rebuild its reputation to prevent further revenue loss.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
