Both Apple and Lionsgate have announced that they are suspending all advertising activity on X (formerly known as Twitter) after owner Elon Musk responded to an antisemitic post on 15 November.
The post in question stated that the Jewish community supported “dialectal hatred” against White people, to which Musk responded, “You have said the actual truth”.
Musk originally clarified that this statement was specifically directed to the Anti-Defamation League (ADL), not to the Jewish community.
However, this statement was credited as the reason behind Apple and Lionsgate’s decisions to suspend advertising.
Apple confirmed the news to Axios on 17 November, whilst a spokesperson for Lionsgate spoke to Reuters about the suspension today (20 November).
X’s ad revenue since Musk’s 2022 takeover has almost halved in value, which was confirmed by Elon Musk on 15 July.
GlobalData’s 2023 thematic intelligence social media report found that the volume of M&A deals within the sector slowed down as companies began to show caution in their investments.
The value of social media M&A deals has dropped below its $40m peak in 2018 to under $20m.
Emphasis on e-commerce and AI continued within investments made by social media companies throughout 2022 and 2023.
This focus may be explained by social media companies needing to diversify after the ad-driven business model of the sector is increasingly under threat due to regulatory scrutiny.
Alphabet, Amazon, ByteDance and Meta all faced fines collectively worth over $7.7bn in 2023 by breaching data privacy laws to create targeted user ads.
X itself has also branched out into AI.
Earlier this month, Musk released his Grok chatbot which he stated was trained on data collected from X. Once it leaves beta testing, Grok will be available to X users who pay for X’s Premium+ service.
Head of social media and PR at domain provider Fasthosts, Chelsea Hopkins explained that after advertisers such as Lionsgate and Apple leave the site, it would be an understatement to say that X will experience a significant drop in cash flow.
“X has been trying to offset advertiser walkouts with its premium subscription services,” Hopkins stated, “however whether or not this will even remotely cover their losses is yet to be seen. Getting people to pay for a service that has always been free is a difficult task.”
The longevity of these ad boycotts was also questioned by GlobalData senior analyst Amelia Connor-Afflick.
“X claimed in April that other companies who initially retracted their ads following his takeover had returned,” she stated, “Nevertheless, X has drastically suffered from its loss in advertising revenue, and GlobalData’s recent thematic report, Social Media (2023), predicted that X’s popularity and business viability will dwindle as Musk continues to attract controversy.”
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