Elon Musk is not shy of a lawsuit and now his X Corp has instituted a federal antitrust suit targeting a group of entities involved in the advertising sector, such as CVS Health, Mars, Orsted, and Unilever. The lawsuit, lodged in the U.S. District Court for the Northern District of Texas, claims these companies participated in an organized ad boycott that significantly reduced X Corp's revenue.
Coordinated Boycott Claims
The suit suggests that the Global Alliance for Responsible Media (GARM) collaborated with undisclosed co-conspirators to cut off billions in advertising funds. The complaint indicates that GARM's actions would only make economic sense if coordinated with competing advertisers.
Linda Yaccarino, X Corp's CEO, has openly criticized GARM's actions. In a letter addressed to advertisers and confirming the lawsuit, Yaccarino called their behavior “a stain on a great industry” and argued that such activities must come to an end. The suit also references a report from the Republican-led House Judiciary Committee, which contends that GARM used coordinated efforts to suppress conservative voices.
— Linda Yaccarino (@lindayaX) August 6, 2024
GARM's Origins and Role
GARM was established by the World Federation of Advertisers (WFA) in 2019 to oversee brand safety standards in digital advertising. Its members include large tech firms, advertisers, agencies, ad tech entities, and advertising coalitions. GARM has faced increasing scrutiny from conservative lawmakers and media outlets, who accuse it of conspiring with GroupM to dissuade clients from advertising on conservative platforms.
Elon Musk's acquisition of X Corp in 2022 has coincided with a decline in the company's ad revenue. Estimates suggest X Corp will generate around $2 billion in ad revenue this year, significantly down from $4.5 billion in 2021.
I reported this month how Yaccarino is facing challenges in appealing to advertisers amid Elon Musk's various controversies. The lawsuit blames GARM's boycott for continuing to affect X Corp's revenue despite the company's adherence to brand safety measures similar to its competitors'.
Further Legal Actions
Rumble, a video-sharing service, has declared its participation in X Corp's lawsuit against WFA and GARM. Rumble also intends to sue WPP and its subsidiary GroupM, another significant ad-buying firm. Correspondence between GARM members hints at boycott plans following Elon Musk's purchase of Twitter.
The lawsuit references a report released in July by the House Judiciary Committee titled, “GARM's Harm.” The report claims that large corporations, advertising agencies, and industry groups engaged in coordinated boycotts to demonetize various platforms, podcasts, news outlets, and other content deemed unfavorable by GARM and its members. The report also touches on boycotts affecting X, The Joe Rogan Experience/Spotify, and various political and news platforms.
