February 23, 2024

Elon Musk’s Controversial Remarks on X Lead to Advertising Suspensions by Major Brands

In the latest of a series of controversial statements made by Elon Musk, the owner of the social media platform X (formerly Twitter), major brands such as Apple, Disney, and Microsoft have decided to pause or suspend their advertising spending on the platform. This move comes after Musk’s recent endorsement of an antisemitic conspiracy theory, causing a firestorm of criticism.

Musk has since issued an apology for his post, but during an interview with New York Times reporter Andrew Ross Sorkin, he used profane language to challenge the advertisers’ decision to suspend their advertising on X. The backlash intensified when Musk accused the companies of blackmail, leading to further ad suspensions, including from retail giant Walmart.

Linda Yaccarino, X’s chief executive, has addressed the controversy, highlighting Musk’s apology and describing his interview as wide-ranging and candid. She reportedly shared a memo with employees, describing the situation as profound.

While some brands have been gradually reducing their presence on X over the past year, recent actions were triggered by a report from left-wing advocacy group Media Matters for America. The report claimed that ads for brands like IBM were appearing beside pro-Nazi content on X. X has taken legal action against Media Matters, arguing that the report was fabricated to drive advertisers away from the platform and harm X Corp.

The recent advertising suspensions have dealt a significant blow to X’s revenues, particularly because they occurred during the holiday season when the platform typically sees increased spending on promotional content.

The impact of the controversy surrounding Musk can have negative implications for brands that continue to advertise on X. Consumers may perceive these brands as supporting Musk’s controversial stances on social and business topics. In today’s society, consumers often expect brands to take a stand on divisive issues, and failure to do so may result in a loss of customers and lower product sales.

X has a global audience dominated by users aged between 25 and 49 years old, who are typically the age group with the most disposable income in many countries. Therefore, Musk’s statements could have detrimental effects for businesses that maintain an active presence on X.

From a social perspective, Musk’s controversial behavior may unintentionally contribute to the spread of hateful content and disinformation. Although social media platforms and regulators have implemented measures to combat such content, Musk’s recent outburst and ongoing content moderation controversies have set a precedent that could redefine what is deemed acceptable on X.

This shift raises concerns about an increase in incendiary and hateful content, contradicting the platform’s established policies. Exposure to such content can cause mental and emotional distress, prompting users to disengage from social media platforms. Additionally, a public figure’s endorsement of false or misleading information can further the spread of disinformation on social media, exacerbating social divisions, damaging reputations, and undermining public safety.

In conclusion, the controversy surrounding Elon Musk’s remarks on X has resulted in advertising suspensions by major brands, potentially impacting brand perceptions and revenues for both X and the brands that continue to advertise on the platform. Furthermore, the controversy has raised concerns about the spread of hateful content and disinformation, posing risks to public safety and exacerbating social divisions.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it