In big reversal, Amazon raises ad spending on Musk's X
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Amazon is increasing its ad spending on Elon Musk's X, reversing its previous pullback over concerns about hate speech, as other major companies reconsider their advertising strategies on the platform.
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Elon Musk leaves the Tesla Gigafactory for electric cars after a visit in Gruenheide near Berlin on Germany March 13, 2024. (AP)
Amazon is increasing ad spending on Elon Musk's X, sources told The Wall Street Journal, a significant turnaround from removing much of its advertising more than a year ago, when many businesses were concerned about hate speech on the platform.
Amazon CEO Andy Jassy was engaged in the decision, which might result in the corporation investing much more in X. Apple, which removed all of its ad funds off X in late 2023, has recently discussed trying advertisements on the platform, according to a source familiar with the issue.
Some major corporations that have reduced or eliminated advertising on X are reconsidering their positions in light of the shifting political and social context. Musk, the owner of X, has advocated for a softer approach to internet content monitoring and has emerged as one of President Trump's most influential allies.
According to ad buyers, some companies returning to X are doing so at expenditure levels that are still far lower than those before Musk acquired the firm, then known as Twitter, in 2022 for $44 billion.
The return of advertising to X would strengthen its finance sheet at a critical time. The investment banks that provided Musk with money to buy Twitter have struggled to get rid of the debt. According to WSJ, they are currently preparing to sell senior debt for 90 to 95 cents on the dollar.
Advertisers and Musk
In recent years, Trump has frequently criticized technology companies and their CEOs. But the winds have altered considerably since his return to the White House. Amazon, Meta Platforms, and Apple CEO Tim Cook all contributed to Trump's inaugural fund.
Advertisers began departing the site shortly after Musk's acquisition, citing worries about his efforts to ease content-moderation regulations and the chaos caused by management changes. Major ad agencies warned customers that the site was not a secure place to promote.
The platform's earnings plummeted as significant sponsors withdrew. Musk has tried to diversify his business streams, including subscriptions, but advertising remains vital. In late 2023, Musk said that marketers who withdrew their advertisements from X might "go f- yourself."
Tensions rose this summer when X filed a federal antitrust lawsuit against an advertising trade association and several major businesses, including Mars sweets and CVS Health, accusing them of illegally boycotting the platform.
As per the court document, Musk also added Twitch to the lawsuit, citing it had not advertised on X after 2022.
The complaint argues that the ad industry organization conspired "to collectively withhold billions of dollars in advertising from Twitter."
EU probes X over possible violations of Digital Services Act
In mid-January, the European Commission announced it requested additional information from X regarding changes to its recommendation algorithms and content moderation policies. The Commission suspects that these changes may constitute further breaches of the EU Digital Services Act (DSA).
This latest inquiry follows accusations in July 2024, when the Commission warned X of potential non-compliance with the DSA. At the time, the platform was criticized for insufficient advertising transparency and for restricting researchers' access to its public data. The Commission threatened fines of up to 6% of X's global annual turnover unless the issues were resolved.
The Commission revealed it has now issued "three additional technical investigatory measures" to X as part of the formal proceedings initiated on December 18, 2023.
The inquiry comes amid mounting concerns that recent changes to X's algorithmic recommendations may be amplifying right-wing content.
German politicians have raised alarms over the platform's role in promoting politically sensitive material, particularly in the lead-up to European elections. Allegations have also surfaced about X's interactions with controversial figures, including Alice Weidel, the leader of the Alternative for Germany (AfD) party.
The Commission has also sought clarity on how these algorithmic changes may influence public discourse, especially regarding the virality of divisive content. Critics have accused X of failing to mitigate risks to democratic processes, a core requirement of the DSA.
The Digital Services Act, which came into effect in May 2023, is designed to establish a safer and more transparent digital environment within the EU. It obligates online platforms to implement effective content moderation systems to prevent the spread of false, misleading, or harmful information. Platforms found in breach of these regulations face significant financial penalties.
