Social media platform X, which is owned by Elon Musk, is potentially facing a substantial loss in advertising revenue.
What Happened: Recent developments suggest a downturn of up to $75 million by year’s end, as major advertisers reconsider their engagement with the platform, The New York Times reported.
Triggered by Musk’s endorsement of an antisemitic post, prominent companies like Walt Disney (NYSE: DIS) and Warner Bros Discovery (NASDAQ: WBD) have temporarily halted their advertising campaigns on X.
According to the report, internal documents reveal that more than 200 ad units from companies like Airbnb Inc. (NASDAQ: ABNB), Amazon.com Inc. (NASDAQ: AMZN), Coca-Cola Company (NYSE: KO), and Microsoft Corporation (NASDAQ: MSFT) were reevaluating their advertising strategies on X. On Friday, the platform said $11 million in revenue was at risk, with the figure fluctuating as some advertisers returned and others increased their spending.
Since Musk’s takeover in October 2022, X has seen a reduction in content moderation, leading to a rise in hate speech, as reported by civil rights groups.
As per 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 the companies took action on or after Nov. 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.”
In the last three months of 2021, the company recorded $1.57 billion in revenue, of which nearly 90% came from advertising.
This change has resulted in a marked decline in U.S. ad revenue, dropping at least 55% year-over-year each month following the acquisition.
Meanwhile, X has launched a lawsuit against Media Matters, accusing the media watchdog of defamation. The suit claims that a report falsely associated major brand advertisements, including those from Apple Inc. (NASDAQ: AAPL) and Oracle Corporation (NYSE: ORCL), with content promoting hate speech. The legal action is part of X’s efforts to address the negative publicity and pullback of advertisements.
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