Lawsuit fallout —
Global Alliance for Responsible Media disputes X lawsuit but stops operations.
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An advertising industry initiative targeted by an Elon Musk lawsuit is "discontinuing" its activities and has deleted the member list from its website.
On Tuesday, Musk's X Corp. sued the World Federation of Advertisers (WFA) over what X claims is an illegal boycott spearheaded by a WFA initiative called the Global Alliance for Responsible Media (GARM). The WFA isn't disbanding but is halting GARM's activities, and the GARM member page now produces a 404 error. An archived version of the page from yesterday shows the initiative members, including X.
X's antitrust lawsuit has drawn skeptical responses from law professors, who say it will be difficult to prove that companies violated antitrust laws by stopping advertisements. But while X may never obtain financial damages from the advertising group or corporations like CVS and Unilever that it also named as defendants, fighting the lawsuit could be costly.
Business Insider reported on the GARM shutdown today:
The advertising trade group The World Federation of Advertisers told its members on Thursday that it was "discontinuing" activities for its Global Alliance for Responsible Media initiative following an antitrust lawsuit filed by Elon Musk's X against the company earlier this week.
Stephan Loerke, the CEO of the WFA, wrote in an email to members, seen by Business Insider, that the decision was "not made lightly" but that GARM is a not-for-profit organization with limited resources. Loerke said that the WFA and GARM intended to contest the allegations in X's suit in court and were confident the outcome of the case would "demonstrate our full adherence to competition rules in all our activities."
A WFA spokesperson told Ars that the group plans to issue a statement, and we'll update this article when the statement is available.
The GARM shutdown was also confirmed by a New York Times report. The NYT paraphrased Loerke's email as saying that "GARM would shut down its operations immediately."
Group says work is being misrepresented
The WFA was founded in 1953 and is headquartered in Belgium. The WFA started the GARM initiative in 2019. GARM has two full-time staff members, Business Insider wrote. The WFA was also sued by Rumble, the maker of a video platform that is popular with conservatives.
A GARM webpage that was still online today, and which responds to recent criticism, said the group was created "to help the industry address the challenge of illegal or harmful content on digital media platforms and its monetization via advertising." Members can "use GARM's resources and information about best practices to learn where their advertising investments go, and to avoid placement next to illegal or harmful content that could damage their brands' reputation," the page says.
GARM says it provides "voluntary frameworks" to help brands make advertising decisions and "does not interfere with a member's decision as to whether or not to invest advertising resources on a particular website or channel."
"Suggestions that GARM practices may impinge on free speech are a deliberate misrepresentation of GARM's work. GARM is not a watchdog or lobby. GARM does not participate in or advocate for boycotts of any kind," the group says.
X has had an on-again, off-again relationship with GARM. Musk's social network rejoined GARM little more than a month ago, but the reunion didn't last long. "X is committed to the safety of our global town square and proud to be part of the GARM community!" X wrote on July 1.
House Republicans celebrate
GARM has also faced attacks from congressional Republicans. The House Judiciary Committee issued a report last month claiming that "the extent to which GARM has organized its trade association and coordinates actions that rob consumers of choices is likely illegal under the antitrust laws and threatens fundamental American freedoms."
Today, the House Judiciary GOP's official account on X called GARM being discontinued a "big win for the First Amendment" and a "big win for oversight." X CEO Linda Yaccarino also applauded the news.
"No small group should be able to monopolize what gets monetized," she wrote. "This is an important acknowledgement and a necessary step in the right direction. I am hopeful that it means ecosystem-wide reform is coming."
X's lawsuit against the WFA objected to GARM's attempt to enforce "brand safety standards."
"This is an antitrust action relating to a group boycott by competing advertisers of one of the most popular social media platforms in the United States... Concerned that Twitter might deviate from certain brand safety standards for advertising on social media platforms set through GARM, the conspirators collectively acted to enforce Twitter's adherence to those standards through the boycott," X's lawsuit said.
An advertising industry watchdog group called the Check My Ads Institute predicted that X will only lose more advertisers after the lawsuit and its fallout.
"The reality is today's decision [by GARM] means even more advertisers will flee X, and quickly so they're not targeted in the future. Everyone can see that advertising on X is a treacherous business relationship for advertisers," Check My Ads co-founder Claire Atkin said in a statement emailed to reporters.