The World Federation of Advertisers (WFA) is discontinuing the activities of the Global Alliance for Responsible Media (GARM) following an antitrust lawsuit filed by Elon Musk's X. The lawsuit alleges that GARM's members colluded to withhold advertising revenue from Twitter, now known as X. WFA plans to contest these allegations in court, asserting their compliance with competition rules.
Background and Lawsuit
- Antitrust Lawsuit: Filed by X in a Texas court, the suit claims GARM members, including Unilever, Mars, CVS, and Ørsted, illegally withheld billions in advertising revenue from X.
- GARM's Role: Founded in 2019, GARM created frameworks for hate speech, brand safety, and misinformation. It includes over 100 members from major advertisers, agency groups, and ad tech platforms. The adoption of these frameworks was voluntary.
WFA's Response
- Decision to Discontinue: WFA CEO Stephan Loerke informed members that the decision to discontinue GARM was difficult but necessary due to limited resources.
- Legal Battle: WFA and GARM intend to contest the lawsuit and are confident in proving their adherence to competition rules.
Industry Reactions
- X CEO's Statement: Linda Yaccarino emphasized the need for ecosystem-wide reform, stating that no small group should monopolize monetization.
- Advertising Revenue Impact: X's advertising revenue declined significantly after Musk's takeover, with many large advertisers leaving the platform.
- Concerns from Insiders: Advertising insiders believe the lawsuit, even if baseless, will drain GARM's resources and hinder its work.
Additional Legal Challenges
- House Judiciary Committee Investigation: GARM is also under investigation for potentially colluding to demonetize conservative platforms.
- Rumble's Lawsuit: The video site Rumble filed an antitrust suit against WFA, WPP, and GroupM, alleging they restricted advertising on social platforms, including Rumble.
Future Implications
- Potential Criminal Liability: Musk suggested that there might be criminal liability under the RICO Act.
- Encouragement for More Lawsuits: Musk has encouraged other companies boycotted by advertisers to file similar lawsuits.
Representatives for WFA, GARM, and X did not immediately respond to requests for comment.
