- X owner Elon Musk said advertisers may have violated the RICO Act by refusing to advertise on X.
- At the same time, X has filed an antitrust lawsuit against a group of advertisers.
Elon Musk's relationship with advertisers has hit a new low.
Musk's X filed an antitrust lawsuit against advertisers last week, accusing them of illegally boycotting the platform to "collectively withhold billions of dollars in advertising revenue."
Then, in an X post, Musk encouraged companies that have been "systematically boycotted by advertisers" to sue, claiming there could be "criminal liability via the RICO Act."
The RICO Act is a federal law that targets crimes like fraud, robbery, bribery, gambling, extortion, and arson. It stands for Racketeer Influenced and Corrupt Organizations Act and was originally used to help take down the mafia.
Jeffrey Grell, an attorney specializing in RICO, told Business Insider that RICO only deals with unlawful acts and that isn't the case here. "You don't have the right to do business with anybody," he said.
He added that there's "absolutely no reason" attorneys wouldn't bring a civil claim if they thought they had a case.
"I think that Musk is trying to get some PR mileage out of RICO without actually filing a RICO claim here," Grell said. "If his lawyers thought that he had a civil RICO claim, they more than likely would've brought it in the claim that they filed."
Musk acquired Twitter, which he later renamed X, in October 2022. Musk quickly slashed features that moderated inciteful speech and misinformation. Within the year, X's top advertisers had stopped buying space on the platform, fearing their products and services would be associated with questionable content.
Advertising is a key component of the social media site's bottom line.
While Musk has hailed himself a champion of free speech, he was accused of promoting antisemitism on X, which didn't help his situation with advertisers. And when he was asked what he would do about the hateful content, he publicly told advertisers who had withdrawn to "go fuck yourself." His attempts to woo them back have yet to pay off. And now he's suing them.
The antitrust suit X filed named the Global Alliance for Responsible Media and the World Federation of Advertisers as defendants, along with its members CVS Health, Unilever, Mars, and Ørsted. After the lawsuit was filed, GARM announced it would fight the suit but is also discontinuing its activities.
X argues in its suit that the advertisers "acted in parallel to discontinue their purchases of advertising from Twitter, in a marked departure from their prior pattern of purchases."
But acting in parallel to others isn't criminal, Grell said, comparing it to how gas stations might watch each other's prices and adjust accordingly without actually talking to each other.
Similarly, Grell said advertisers could see competitors pull advertising from Musk's X and think, "'I'm going to get off Twitter. I don't want to be blacklisted if I'm advertising on a platform that is getting canceled.'"
"That's just parallel conduct," he said.