X on Tuesday filed a federal antitrust lawsuit against the Global Alliance for Responsible Media (GARM) alleging that members CVS Health, Mars, Orsted and Unilever and founding body the World Federation of Advertisers have colluded to suppress conservative voices and stanch ad revenue from the platform.
In an open letter to advertisers, X CEO Linda Yaccarino explained that the decision to pursue litigation came after the Republican-led House Judiciary Committee released a report in July accusing GARM of using its “tremendous market power” to treat X unfairly.
“GARM and its members directly organised boycotts and used other indirect tactics to target disfavoured platforms, content creators and news organisations in an effort to demonetise and, in effect, limit certain choices for consumers,” the report read.
A Message to X Users pic.twitter.com/6bZOYPhWVa
— Linda Yaccarino (@lindayaX) August 6, 2024
GARM did not respond to requests for comment, according to Campaign UK.
Brand consultants have dismissed the lawsuit’s validity, stating that it ranges from frivolous to disastrous for X.
Ruben Schreurs, chief strategy officer at Ebiquity, told Campaign US that after reviewing the House Judiciary Committee’s report, he found no evidence that GARM organised a systematic illegal boycott against X.
“It seems to me like they are trying to use political tensions to stir unrest to force advertisers back onto their platform, which will simply not work as corporations are free to decide where they display their advertisements,” he said.
Noah Mallin, former head of IMGN Brand Studio at Warner Music Group and current social media consultant, agreed that advertisers can’t be forced to place ads anywhere, and said any attempt to do so would violate their free speech rights.
“Musk has continually treated advertisers as adversaries, and no amount of trying to act contrite at Cannes will take that bad taste out of agency and brand leaders’ mouths,” he said. “Combined with degraded ad tools and rampant bot activity and hate speech, there just isn’t a compelling reason to spend on ads there for most big advertisers.”
He added that Yaccarino, who had strong relationships with advertisers in her previous role leading ad sales for NBCUniversal, “has burned the substantial good will she still had by being the face of this lawsuit.”
X has feuded with advertisers since Elon Musk’s acquisition of the company, then Twitter, in 2022. Many brands have halted their paid advertising on the platform, leading to a monthly U.S. ad revenue drop of at least 55 per cent year-over-year since Musk took over.
Media buyers have repeatedly stated that despite releasing new ad tools recently, that X’s biggest problem continues to be brand safety.
In early July, X joined GARM to assure advertisers of its commitment to brand safety.
We’re excited to announce that X has reinstated our relationship with the @wfamarketers Global Alliance for Responsible Media. As of today, X is included as a member of #GARM here: https://t.co/vZ3imzeXda
X is committed to the safety of our global town square and proud to be…
— Safety (@Safety) July 1, 2024
Less than two weeks later, Musk posted that “X has no choice but to file suit against the perpetrators and collaborators in the advertising boycott racket” in response to footage of the Daily Wire’s Ben Shapiro lambasting GARM at a congressional hearing.
Conservative media such as the Daily Wire has also accused GARM of discouraging GroupM clients from buying ads on their sites. Video streaming service Rumble on Tuesday said it would join X in its lawsuit against GARM and would additionally sue WPP and GroupM.
GroupM declined to comment, according to Campaign UK.
According to a report from Bloomberg, X generated $1.48 billion in revenue in the first half of 2023 — down roughly 40 per cent YoY — and lost $456 million in the first quarter.
