Musk’s threat to sue firms that don’t buy ads on X seems to have paid off

Legal case weak but works as pressure tactic

X's legal case against advertisers is a weak one, law professors told Ars last year, but it has achieved some success as a pressure tactic. X sued advertisers in US District Court for the Northern District of Texas, a venue that Musk likes so much that he updated X's terms of service to require any user lawsuits in federal court to be filed there.

Amazon-owned Twitch was dropped from X's lawsuit in May this year after a deal between the companies. No details on the deal were provided at the time, but it was reported in January that Amazon was ramping up its ad spending on X.

Yesterday's Wall Street Journal article provides a few more details on Amazon's decision to increase spending on X. It says there were "months of negotiations that involved Amazon Chief Executive Andy Jassy."

The Journal cited one person familiar with the matter as saying the Twitch lawsuit "didn't factor into Amazon's decision to ramp up spending on X." It turns out that Musk's failure to pay vendors that provided services to Twitter has played a role in ad negotiations. The WSJ story suggests that X told Amazon it would pay its unpaid cloud computing bills in exchange for ad spending:

People close to X said the platform pressed vendors that were supplying it with goods or services to spend money on advertising. X is a customer of Amazon Web Services, its cloud-computing unit, and had past-due bills for that. X used those unpaid bills as leverage during negotiations, according to people familiar with the matter.

At its peak, Amazon had spent around $100 million a year on advertising on X, according to a person familiar with the matter, far more than it is currently spending.

We contacted X, Verizon, and Amazon today and will update this article if we get any comments.