Elon Musk’s X just sued a nonprofit advertising group out of existence

New York (CNN) — A major ad industry group is shutting down, days after Elon Musk-owned X filed a lawsuit that claimed the group illegally conspired to boycott advertising on his platform.

“GARM is a small, not-for-profit initiative, and recent allegations that unfortunately misconstrue its purpose and activities have caused a distraction and significantly drained its resources and finances,” the group said in a statement Friday. “GARM therefore is making the difficult decision to discontinue its activities.”

The group, Global Alliance for Responsible Media, also known as GARM, is a voluntary ad-industry initiative run by the World Federation of Advertisers that aims to help brands avoid having their advertisements appear alongside illegal or harmful content. GARM confirmed it is still planning to defend itself in court.

The end of GARM marks a temporary victory for Musk and X CEO Linda Yaccarino, even though a judge hasn’t made a ruling yet.

“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,” Yaccarino posted on X Thursday.

However, the lawsuit could drive away even more advertisers from X, Nandini Jammi and Claire Atkin, founders of watchdog group Check My Ads Institute wrote in an op-ed Thursday. “Everyone can see that advertising on X is a treacherous business relationship for advertisers,” they said.

The lawsuit claims GARM organized “to collectively withhold billions of dollars in advertising from Twitter” because the group was concerned that the platform had deviated from brand safety standards after Musk’s acquisition in late 2022.

GARM has over 100 members. Four of those members — CVS, Unilever, Mars and the Danish energy company Ørsted — were named defendants in the suit filed in federal court in Texas Tuesday.

GARM was set up in 2019 after the Christchurch New Zealand Mosque shootings, where the murderer livestreamed the shooting on Facebook. Following that, brands’ faced issues where their ads were placed next to illegal or harmful content, the group said in a statement. GARM said its group reduced such ads from 6.1% in 2020 to 1.7% in 2023.

Brands raised similar concerns when Musk acquired X in 2022, tanking the platform’s core ad business. Many brands have pulled their spending over concerns that their ads might run alongside misinformation or hate speech, which Musk himself has occasionally promoted. The suit also continues Musk’s habit of feuding with the advertisers whose money he relies on; last year, he told brands who had left the platform to “go f**k yourself.”

Though at times X leaders hinted the company’s ad business was improving, Yaccarino in a video Monday said, “They conspired to boycott X, which threatens our ability to thrive in the future,” she said of the GARM members, adding that the loss in advertising dollars placed the company “at long-term risk.”

The end of GARM could raise concerns for other media watchdogs, though a judge has sided with a nonprofit in a similar suit.

X also sued the Center for Countering Digital Hate, alleging the nonprofit group violated its terms of service when it studied, and then wrote about, hate speech on the platform and blamed it for driving away advertisers. (A federal judge tossed the suit in March, blasting it as an attempt to punish CCDH for protected speech.)

X also sued the progressive watchdog group Media Matters over its analysis highlighting antisemitic and pro-Nazi content on X — a report that appeared to play a significant role in a massive and damaging brand revolt late last year. The case is set to go to trial next year.

The-CNN-Wire
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