The World Federation of Advertisers (WFA) has decided to discontinue its corporate responsibility program, the Global Alliance for Responsible Media (GARM), following a lawsuit filed by Elon Musk’s X, formerly known as Twitter. The lawsuit accuses the group of orchestrating a “massive advertiser boycott” against X, which has led to significant legal challenges for the WFA. GARM, a not-for-profit initiative within the WFA, was established to help brands avoid advertising alongside or monetizing harmful content.
The legal action taken by X targets major advertisers, including Unilever, Mars, and CVS Health, accusing them of unlawfully conspiring to withhold “billions of dollars in advertising revenue” from the social media platform. The lawsuit claims that these companies, as members of the WFA, participated in a conspiracy to damage X’s advertising revenue.
Reactions and Statements-Global Advertiser
Following the news, X CEO Linda Yaccarino expressed her support for the legal move, stating on Twitter: “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.”
The lawsuit has sparked reactions from various stakeholders. The online video platform Rumble, known for its conservative user base, also joined the legal action, filing a similar lawsuit against the WFA over GARM’s activities.
Impact on Advertising and Content Moderation
The lawsuit comes amid a sharp decline in advertising revenue at X following Musk’s acquisition of the company in 2022. The reduction in content moderation teams led to an increase in antisemitic content on the platform, with ads reportedly running alongside pro-Nazi sentiments. Musk has labeled the advertisers’ withdrawal as “blackmail,” urging them to stay away in a profanity-laced rant.
X is seeking unspecified damages and a court order to prevent any continued efforts to conspire against it. The lawsuit has raised concerns among advertisers and watchdog organizations about the implications of advertising on X. Claire Atkin, co-founder of the ad tech watchdog Check My Ads, stated that the lawsuit might deter more advertisers from engaging with X, emphasizing the risks involved in advertising on the platform.
Congressional Involvement and Industry Response
A committee within the US Congress recently held a hearing on “collusion in the Global Alliance for Responsible Media,” examining potential anticompetitive collusion in online advertising. Following the news of GARM’s shutdown, the X account for Republicans on the House Judiciary Committee tweeted: “Big win for the First Amendment. Big win for oversight.”
Unilever USA’s president, Herrish Patel, defended the company’s advertising decisions during a congressional hearing, stating, “Unilever, and Unilever alone, controls our advertising spending. No platform has a right to our advertising dollar.”
Conclusion
The discontinuation of GARM marks a significant shift in the landscape of responsible advertising, as advertisers will need to take more direct responsibility for where their ads appear. The legal battle between X and major advertisers highlights the complexities of advertising in the digital age, as companies navigate the challenges of maintaining brand safety while engaging with influential social media platforms.
