Will Elon’‘s Increasing Political Ambitions Help or Hurt X?
Amid Elon Musk’s move into politics, which has seen him take up an influential advisory role within the new Trump Administration, the backlash against Musk is also rising internationally, which could hurt his broader business interests
At the same time, some U.S. companies are seeking to appease the enigmatic business leader, in order to avoid being targeted by future investigations and penalties, under Trump’s increasingly punitive approach to governance.
Will that ultimately lead to better outcomes for Musk’s X initiative, or will the backlash hurt more than the potential benefits?
As we reported last week, the latest indicators from inside X suggest that the platform is still struggling to make money, and could even post a loss for FY 2024. X has been in a steady decline since Musk took over at the app in 2022, with his divisive stances, and changes at the app raising concerns among many ad partners.
That’s lead to a significant drop in X’s ad revenue, which Musk himself had predicted, though he had hoped to supplement this with an increase in subscriptions, bringing direct revenue into the app.
That hasn’t happened, and as a result, X is working to find new ways to get its ad business back on track.
And in some cases, Musk’s political presence does seem to be helping in this regard.
According to reports, various big brands are now looking to resume their ad spend on X, in order to cosy up to Musk, and the Trump team. Amazon, for example, which had been one of the biggest names to announce a pause on X spending back in 2023, is now looking to resume its full X ads push, while Apple is also reconsidering its decision to pull its X ads.
Apple has also updated its iOS connection options to allow T-Mobile users to connect via Starlink, another Musk-owned company, while another major corporate, Visa, has also announced that it’ll partner with X on its coming payments program.
At the same time, X has also added more companies into its legal action against an advertiser boycott, led by industry advisory group the Global Alliance for Responsible Media (GARM) back in 2023.
Last August, X announced that it would be pursuing legal recourse against GARM, and its chief coordinator the World Federation of Advertisers (WFA), over what it claimed to have been “a group boycott by competing advertisers of one of the most popular social media platforms in the United States.”
Which is an odd legal approach, suing advertisers for not buying ads in the app. But X’s stance is that GARM “organized an advertiser boycott with the goal of coercing Twitter (now X) to comply with the GARM Brand Safety Standards to the satisfaction of GARM.”
When X refused to play by the industry norms, GARM reportedly then advised brands to stop advertising on X, which then saw the company suffer huge financial losses. X claims that GARM had no grounds for this action, which is why it’s launched legal action against the group, while it’s also named various big-name brands that halted their X ad spend in the legal push.
Those specifically named in the initial suit were CVS, Mars, Ørsted, and Unilever (though Unilever was later removed from the action after negotiating separately with X).
And last week, it expanded that cohort once again, adding Nestlé, Abbott Laboratories, Colgate, Lego, Pinterest, Tyson Foods, and Shell into the mix.
The tactic from the X team seems to be that by naming these specific brands, and making them targets of the lawsuit, that’ll prompt them to address these concerns, in order to avoid negative PR exposure.
And with Elon taking on more power in the Trump team, that might now hold more sway, which could be another means to bring more ad dollars back to X, and get its ad business back on track.
Maybe, that’ll bring more domestic ad partners back to the app, through naming and shaming tactics, and the threat of regulatory penalties under Trump.
But internationally, Musk’s actions don’t look to be providing the same benefits.
Musk’s expanding political ambitions have seen Canadian officials look to distance themselves from his companies, have caused backlash amongst German and Polish audiences, and have sparked criticism from the U.K.
Trump’s American-first approach is set to spark ongoing trade wars with various regions, and Musk is now intrinsically linked to this push, which could prompt a wider pushback against his own business interests.
Which is a risk that Musk was always taking, that his divisive stances would impact his own commercial interests. Maybe, the benefits in America will outweigh a lot of these losses, by bringing more ad revenue back to X from its key ad revenue hub. But it could end up being a null result, and could keep X in a tenuous spot as an independent business interest.
Musk does have other avenues to fund the company, and keep X running, in any event. He could look to invest more of his own capital into the project, shifting investment from Tesla into X to keep it going, or he may also look to funnel funding from xAI into X itself, paying the platform for the data it provides his AI projects.
So X is unlikely to go dark anytime soon as a result, but Musk’s political presence is set to put more of a strain on his business interests.
Maybe, ultimately, that will benefit Musk’s companies, through increased subsidies and government funding, and reduced regulatory obligations across all of his businesses. There's also a chance that Musk could make X the central app for government business, which seems unethical, and even impossible given the conflicts of interest. But maybe, that won't matter, and X will literally become the "everything app" for managing your government records.
Either way, it’s another element to monitor as Elon looks to further his own political ambitions.
Originally published at Social Media Today
