How Elon Musk and X's decision to sue advertisers may have just backfired
Just earlier this week, Elon Musk's X announced that it was suing the constituent members of an initiative known as the Global Alliance for Responsible Media (GARM).
On Thursday, just days after X's federal antitrust lawsuit was filed, the organization behind GARM, the World Federation of Advertisers (WFA), announced that it was dissolving GARM. The WFA and several corporations were the suit's named defendants, not GARM itself.
X claimed in its lawsuit that WFA and a number of its major advertising members "conspired" to “collectively withhold billions of dollars in advertising revenue”
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After the news was announced, X CEO Linda Yaccarino took to X to celebrate GARM's end. However, at least one adtech watchdog is claiming that this might actually backfire for X.
GARM shuts down
According to a letter from the WFA that was sent to its members, as first reported by Business Insider, the group was "discontinuing" GARM as a result of X's lawsuit as the initiative was a non-profit with limited resources. The GARM initiative, which helped members avoid advertising on harmful websites, was staffed by only two full-time employees.
However, the WFA will continue on and challenge X's lawsuit, saying they committed no wrongdoing.
The Republican-led House Judiciary Committee, whose report was used by X in its lawsuit, deemed GARM's closure a "big win for the first amendment."
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X CEO Linda Yaccarino quoted the House Judiciary Committee post in her own reply.
"No small group should be able to monopolize what gets monetized," Yaccarino said. "This is an important acknowledgement and a necessary step in the right direction. I am hopeful that it means ecosystem-wide reform is coming."
Mashable reached out to X for comment. In a reply, X emailed a link to Linda Yaccarino's statement above.
Not so fast, X
However, Check My Ads, an adtech watchdog that has successfully taken on hateful websites and ad platforms that serve advertising on them, says that X's celebration is premature.
"Advertisers know a bad ad placement when they see one," said Claire Atkin, co-founder of Check My Ads, in a statement provided to Mashable. "The reality is today’s decision means even more advertisers will flee X, and quickly so they’re not targeted in the future."
In an analysis of GARM's closure on its own website, Check My Ads' founders say that the more likely outcome is that advertisers will now be less likely to advertise on X as they won't base advertising decisions on GARM's recommendation. Check My Ads points out that X was just touting how it was reinstated into GARM just last month.
X posted that the reinstatement was part of its "deep commitment to brand safety."
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So to recap, X had just regained GARM as an ally, and then it filed a lawsuit, apparently causing its ally to disband, leaving — assuming it really was a monopoly — no comparable initiative in existence to recommend that advertisers make deals with X.
"Everyone can see that advertising on X is a treacherous business relationship for advertisers," Atkin's said in Check My Ads' statement to Mashable. "And we know, based on public reporting, X doesn’t have all that many to lose."
