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Consultants call GARM antitrust lawsuit ‘disaster’ for X

Posted on by darion

X filed a federal antitrust lawsuit Tuesday against the Global Alliance for Responsible Media (GARM), alleging that members CVS Health, Mars, Orsted, and Unilever, as well as the founding organization of the World Federation of Advertisers, conspired to suppress conservative voices and block advertising revenue from the platform.

IN open letter to advertisersX CEO Linda Yaccarino explained that the decision to pursue legal action came after the Republican-led House Judiciary Committee released report in July accusing GARM of using its “enormous market power” to treat X unfairly.

“GARM and its members have directly organized boycotts and used other indirect tactics to target unpopular platforms, content creators, and news organizations in an effort to deprive consumers of choice and, as a result, limit certain choices,” the report said.

GARM did not respond to requests for comment.

The brand consultants dismissed the lawsuit, stating it was both frivolous and disastrous for Company X.

Ruben Schreurs, chief strategy officer at Ebiquity, told Campaign US that after reviewing the House Judiciary Committee report, he found no evidence that GARM organized a systematic, illegal boycott against X.

“I think they’re trying to use political tensions to create unrest and force advertisers back onto their platform, which just won’t work because corporations have the freedom to decide where they show their ads,” he said.

Noah Mallin, former head of IMGN Brand Studio at Warner Music Group and a current social media consultant, agreed that advertisers cannot be forced to place ads anywhere and said any attempt to do so would violate their right to free speech.

“Musk has consistently treated advertisers as adversaries, and neither has Trying to fake remorse in Cannes will remove that bad taste from the mouths of agencies and brand leaders,” he said. “Combined with degraded ad tools and rampant bot activity and hate speech, there is simply no compelling reason for most large advertisers to spend money on ads in this space.”

He added that Yaccarino, who had good relationships with advertisers in her previous role as head of ad sales at NBCUniversal, “wasted any goodwill she had by becoming the face of this lawsuit.”

X came into conflict with advertisers since Elon Musk acquired the company, then Twitter, in 2022. Many brands have stopped paid advertising on the platform, leading to a monthly increase in advertising in the U.S. advertising revenues down by at least 55% year over year since Musk took over.

Media buyers have repeatedly stated that despite the recent introduction of new advertising tools to the market, X’s biggest concern remains brand safety.

In early July, X joined GARM to assure advertisers of its commitment to brand safety.

Less than two weeks later, Musk published that “X has no choice but to file suit against the perpetrators and associates involved in the advertising boycott” in response to a recording of the Daily Wire’s Ben Shapiro harshly criticizing GARM during a congressional hearing.

Conservative media outlets like the Daily Wire also accused GARM discouraging GroupM customers from buying ads on their sites. Video streaming service Rumble on Tuesday said join X in his lawsuit against GARM and would additionally sue WPP and GroupM.

GroupM declined to comment.

According to According to a Bloomberg report, X generated $1.48 billion in revenue in the first half of 2023 — down about 40% year over year — and lost $456 million in the first quarter.