By Krystal Scanlon • August 6, 2024 •
Ivy Liu
Elon Musk, the controversial owner of ad-funded platform X, has followed through on his threat to sue a global alliance of advertisers over alleged antitrust activity.
His company filed the federal lawsuit today in the U.S. District Court for the Northern District of Texas against the Global Alliance for Responsible Media (GARM), targeting its members CVS Health, Mars, Orsted, Unilever, and the trade body behind it, the World Federation of Advertisers (WFA). GARM didn’t immediately respond to a request for comment.
CEO Linda Yaccarino announced the lawsuit in an open letter to advertisers, stating it was “not a decision we took lightly, but it is a direct consequence of their actions.”
The actions in question refer to allegations made by the Republican-led House Judiciary Committee, accusing GARM’s members of violating antitrust laws by censoring conservative voices online and coordinating efforts to restrict free speech on X.
The Republican-led House released a report in July outlining its belief that GARM had “tremendous market power in the advertising industry.” Already, GARM had decreased its communication this last year, at least according to one media buyer who went from receiving email communication from the organization a few times a month to one time per month. “They’re getting very tight lipped,” the buyer said.
While the timing of the reduction in activity certainly aligns with a legislative spotlight on GARM from the GOP, the buyer also noted that “GARM has done a lot of what it was established to do” by creating an “industry accepted taxonomy of content categories and classifications for brand safety and suitability.”
“Prior to GARM that didn’t exist,” said the buyer. “So there was this interminable and irritating conversation going on between advertisers, agencies and media sellers that was like, ‘Is this unsafe? What does unsafe mean?’ ‘Well, I didn’t like it because of this.’ ‘Oh, it didn’t look like it was unsafe.’ Round and round and round we go because it was a totally subjective conversation and there wasn’t a high ground.”
Last month, Musk foreshadowed his own legal drama, stating that X had “no choice” but to go to court. He also hinted at potential criminal charges for the involved parties, dubbing GARM a “cartel” with a stranglehold on advertising practices, and blaming it for crippling X’s revenue and ad-based business model.
Yaccarino echoed those comments in the open letter. “The consequence — perhaps the intent — of this boycott was to seek to deprive X’s users, be they sports fans, gamers, journalists, activists, parents or political and corporate leaders, of the Global Town Square,” she wrote. “To put it simply, people are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott.”
Ironically, this lawsuit comes just over a month after X rejoined GARM, aiming to reassure advertisers that safety is a top priority. This flip-flop highlights Musk’s dramatic 180-degree shift in stance toward the nonprofit. But it’s clear Musk’s vision for X clashes head-on with the advertising industry’s standards and demands for top-tier brand safety.
Tensions have been simmering since Musk took over X in the fall of 2022. Many advertisers, big and small, quickly yanked their ads over concerns about content moderation and brand safety. This mass exodus has hammered X’s ad revenue, with reports showing a decline of at least 55% year-over-year each month since Musk bought the company. As advertisers fled, GARM members voiced their worries about X’s content moderation capabilities.
These concerns were magnified by Musk’s controversial statements and decisions. He once endorsed an antisemitic conspiracy theory, later calling it “literally the worst and dumbest” thing. This incident, among many others, underscored the chasm between Musk’s free speech absolutism and advertisers’ need for brand safety. His reinstatement of controversial figures and relaxation of content moderation policies has only deepened this divide.
— Senior marketing editor Kristina Monllos and media editor Kayleigh Barber contributed to this story.
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