In a significant development this week, Elon Musk’s X has initiated legal action against the members of the Global Alliance for Responsible Media (GARM).
Just days after filing a federal antitrust lawsuit, the organization behind GARM, the World Federation of Advertisers (WFA), announced its decision to dissolve the initiative. Notably, the WFA, along with several major corporations, was named as a defendant, although GARM itself was not included in the lawsuit.
X’s lawsuit alleges that the WFA and its advertising members colluded to “collectively withhold billions of dollars in advertising revenue.”
Following the announcement, X CEO Linda Yaccarino expressed her support for the dissolution of GARM. However, some industry experts warn that this decision could backfire on X.
Dissolution of GARM Unveiled
According to a letter from the WFA, reported earlier, the organization is “discontinuing” GARM in light of X’s lawsuit, citing the initiative’s limited resources as a non-profit. GARM, which aimed to assist members in avoiding advertising on harmful websites, had only two full-time staff members.
Despite GARM’s closure, the WFA plans to contest X’s lawsuit, asserting that they have not engaged in any wrongdoing.
The closure of GARM was celebrated by the Republican-led House Judiciary Committee, which stated that it represents a “big win for the First Amendment.”
Yaccarino echoed these sentiments, stating that no small group should control what is monetized, and expressed hope for broader ecosystem reforms.
Concerns Over X’s Future
Despite the optimistic view from X, adtech watchdog Check My Ads warns that the company’s celebration may be misplaced. Co-founder Claire Atkin emphasized that advertisers are acutely aware of problematic ad placements, suggesting that this development may lead to a faster departure of advertisers from X to avoid future complications.
In a statement from Check My Ads, the founders indicated that advertisers may now be less inclined to promote on X without GARM’s recommendations, pointing out that X had previously highlighted its reinstatement in GARM just last month as a sign of its commitment to brand safety.
In a perplexing twist, X transitioned from regaining GARM as an ally to filing a lawsuit that ultimately led to the initiative’s disbandment, leaving no comparable framework to guide advertisers in their decisions.
Atkin concluded, stating that advertising on X now poses significant risks for brands, especially as the platform has a dwindling number of advertisers.
