Elon Musk’s X sues the World Federation of Advertisers over alleged advertising boycott

In an open letter published today on X and addressed to advertisers, X CEO Linda Yaccarino alleged that “the illegal behavior of these organizations and their executives cost X billions of dollars.”

The lawsuit follows a July report from the Republican-led US House of Representatives Committee on the Judiciary, which found that Garm and the WFA colluded “to demonetize platforms, podcasts, news outlets and other content deemed disfavored by Garm and its members … eliminating a variety of content and viewpoints available to consumers.”

The Committee wrote in its report that it found “a clear bias that infiltrates Garm’s work and favors left-leaning news sources.”

In her open letter today, Yaccarino echoed the report and painted Garm’s and the WFA’s activities as an assault to X’s symbolic position as the “global town square.”

“People are hurt when the marketplace of ideas is constricted,” she said in a video addressed to X users. “No small group of people should be able to monopolize what gets monetized.”

A Message to X Users pic.twitter.com/6bZOYPhWVa

— Linda Yaccarino (@lindayaX) August 6, 2024

In short, X believes that the WFA and Garm systematically worked to get advertisers to pull back ad spend on the platform, which the company argues is a tactic to smother free speech on X.

Billionaire Tesla CEO Elon Musk purchased the X in October 2022 for $44bn and promptly got to work on a dramatic internal restructuring. He slashed about half of the company’s workforce and ran out top execs. He turned the platform’s blue checkmark verification model into a pay-to-play scheme (a decision being investigated by regulators in the EU) and drastically reduced content moderation measures in the name of free speech – a move that invited an influx of hate speech and misinformation onto X.

In the time since Musk’s acquisition, advertisers have cut ad spend on X significantly – likely over brand safety concerns – greatly hampering the platform’s ability to generate revenue.

Now, lashing out against advertisers’ decisions, the company is pushing blame on to Garm and the WFA.

Garm was established by the WFA in the summer of 2019 following the Christchurch mosque shootings in New Zealand, which were live-streamed on Facebook and reinvigorated debates about content moderation and brand safety in the digital ecosystem.

Though Garm claims on its website to be “apolitical,” the Judiciary Committee report claims that the organization has been working to divert advertisers away from certain platforms – like Fox News, The Daily Wire, The Joe Rogan Experience and X – that hosts content with which it disagrees for political or ideological reasons.

Garm has written on its website that it “is assiduous in its adherence to competition rules,” and that “the recent allegations by the US House Judiciary Committee … are unfounded.”

At the time of publishing, neither Garm nor the WFA have responded to The Drum’s requests for comment.

In her open letter to advertisers today, Yaccarino hinted that X is prepared to take additional steps against Garm and the WFA should the lawsuit not produce the company’s desired result. “To those who broke the law, we say enough is enough. We are compelled to seek justice for the harm that has been done by these and potentially additional defendants, depending on what the legal process reveals.”

Despite such strong language, it has yet to be determined whether or not Garm or the WFA have breached US law. The House Judiciary notes that the actions highlighted in its report are “likely illegal under the antitrust laws” and that it “will continue its investigation into the companies that participate in this conduct to inform potential legislative reform.”

Video-sharing platform Rumble also announced Tuesday that it has filed an antitrust lawsuit against the WFA over similar concerns. The company is also suing WPP – one of the largest ad agency holding companies on Earth – and its subsidiary, GroupM Worldwide.

“The brand safety standards set by advertisers and their ad agencies should succeed or fail in the marketplace on their own merits and not through the coercive exercise of market power,” Rumble wrote in a blog post. “All of this illegal conduct is done at the expense of platforms, content creators, and their users, as well as the agencies’ own advertiser clients who pay more for ads as a result of their collusion.”

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