WFA disband GARM following Antitrust Lawsuit from Elon Musk's X

The World Federation of Advertisers (WFA) announced the suspension of activities for its Global Alliance for Responsible Media (GARM) initiative, following an antitrust lawsuit filed by Elon Musk's X (formerly Twitter) earlier this week. The lawsuit, filed in a Texas court on August 6, 2024, alleges that GARM members illegally colluded to withhold billions of dollars in advertising revenue from the platform.

According to Business Insider, WFA CEO Stephan Loerke informed members about the decision to discontinue GARM activities in a communication sent on Thursday. This swift action came just two days after X initiated legal proceedings against GARM, the WFA, and several major advertisers including Unilever, Mars, CVS, and Ørsted.

The lawsuit's core allegation centers on GARM's alleged role in persuading top brands to cease advertising on Twitter following Elon Musk's acquisition of the platform in late 2022. X claims that this coordinated action resulted in a significant drop in advertising revenue, which has been a point of contention since Musk's takeover.

GARM, founded in 2019, had established itself as a significant initiative within the digital advertising ecosystem. With over 100 members including major advertisers, agency groups, and ad tech platforms, GARM created frameworks providing common definitions for contentious areas such as hate speech, brand safety, and misinformation. These frameworks were voluntary and did not explicitly name or rank specific platforms.

The suspension of GARM activities marks a significant disruption in the digital advertising landscape. GARM's work had been influential in shaping industry standards and practices, particularly in addressing brand safety concerns in an increasingly complex digital environment.

Loerke expressed confidence in contesting the allegations made in X's lawsuit. He stated that the WFA and GARM intended to demonstrate their full adherence to competition rules in all their activities through the legal process. This stance suggests that while GARM activities are suspended, the organization is prepared to defend its practices and reputation in court.

The timing of this lawsuit and subsequent suspension of GARM activities is particularly noteworthy. It comes at a time when X has been struggling to regain advertiser confidence following Musk's acquisition. The platform has faced numerous challenges, including widespread layoffs, changes in content moderation policies, and the reinstatement of previously banned accounts. These factors contributed to a significant exodus of advertisers, which X now alleges was orchestrated by GARM.

X CEO Linda Yaccarino responded to the news of GARM's suspension with a post on the platform, stating, "No small group should be able to monopolize what gets monetized. This is an important acknowledgement and a necessary step in the right direction. I am hopeful that it means ecosystem-wide reform is coming." This statement underscores X's position that GARM's actions have had an unfair impact on the platform's monetization efforts.

The lawsuit and subsequent suspension of GARM activities have broader implications for the digital advertising industry. Advertising insiders, speaking to Business Insider, expressed concerns that even if X's claims are ultimately found to be baseless, the legal action could significantly hinder GARM's work by draining its resources. This is particularly concerning given that GARM operates with only two full-time staff members and was already dealing with legal requests from the House Judiciary Committee.

The House Judiciary Committee, led by Chairman Jim Jordan (R-Ohio), has been investigating whether GARM members illegally colluded to demonetize conservative platforms and voices. This ongoing investigation adds another layer of complexity to the situation. Russell Dye, a spokesperson for the Committee, characterized the suspension of GARM activities as "a big win for the First Amendment and a big win for Chairman Jordan's oversight work."

It's worth noting that X's lawsuit is not an isolated incident. On the same day, video platform Rumble filed its own antitrust suit against the WFA, WPP (an advertising holding company), and its media arm GroupM. Rumble's lawsuit alleges a collective agreement to restrict advertising on social platforms, including Rumble itself. This parallel legal action suggests a broader pushback against perceived collusion in the digital advertising space.

Elon Musk has been vocal about encouraging other companies who believe they have been "systematically boycotted by advertisers" to file similar lawsuits. In posts on X, Musk even suggested the possibility of criminal liability under the Racketeer Influenced and Corrupt Organizations (RICO) Act, signaling a potentially more expansive legal strategy.

The suspension of GARM activities and the ongoing legal challenges raise important questions about the balance between industry self-regulation and antitrust concerns. GARM's frameworks were designed to address legitimate brand safety concerns in a complex digital ecosystem. However, X's lawsuit alleges that these efforts crossed the line into illegal collusion, effectively weaponizing brand safety concerns to target specific platforms.

As this situation unfolds, it will likely have far-reaching implications for how digital advertising is regulated and how industry initiatives operate. The outcome of these legal proceedings could reshape the relationship between social media platforms, advertisers, and industry organizations.

In conclusion, the suspension of GARM activities following X's antitrust lawsuit marks a significant moment in the digital advertising industry. It highlights the tensions between platform monetization, brand safety concerns, and competition law. As the legal process unfolds, it will be closely watched by industry players, regulators, and observers alike, potentially reshaping the landscape of digital advertising and platform governance.

Key facts

Announcement date: August 8, 2024

Entity suspending activities: Global Alliance for Responsible Media (GARM)

Reason for suspension: Antitrust lawsuit filed by X (formerly Twitter)

Date of X's lawsuit filing: August 6, 2024

Key defendants: GARM, World Federation of Advertisers, Unilever, Mars, CVS, Ørsted

GARM founding year: 2019

Number of GARM members: Over 100

GARM full-time staff: 2

Parallel lawsuit: Filed by Rumble against WFA, WPP, and GroupM

Ongoing investigation: House Judiciary Committee led by Jim Jordan