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Elon Musk’s X Files Antitrust Suit Against Global Advertising Alliance

By  |  August 6, 2024
Elon Musk’s X Files Antitrust Suit Against Global Advertising Alliance

Elon Musk’s social media platform X has launched a significant antitrust lawsuit against the Global Alliance for Responsible Media (GARM) and several of its member companies, alleging an illegal ad boycott that targeted the platform. The lawsuit, filed in Texas, is aimed at GARM, its parent firm World Federation of Advertisers (WFA), and members including CVS Health, Mars, Orsted and Unilever.

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    In an open letter to advertisers, X CEO Linda Yaccarino highlighted the reasons behind the lawsuit, stating that it was a direct response to GARM’s actions which allegedly cost the company billions of dollars. “This is not a decision we took lightly, but it is a direct consequence of their actions,” Yaccarino wrote. “The illegal behavior of these organizations and their executives cost X billions of dollars” per The New York Post.

    The lawsuit is seeking trebled compensatory damages and injunctive relief, according to a complaint viewed by The New York Post. GARM, led by Robert Rakowitz, is an initiative of the WFA, which represents many of the world’s largest companies and ad organizations, including Disney and Coca-Cola. Its members control 90% of global marketing spending, nearly $1 trillion per year.

    Related: Elon Musk’s X Found In Breach of EU Content Rules

    Yaccarino emphasized that the issue extends beyond financial damages. “This case is about more than damages — we have to fix a broken ecosystem that allows this illegal activity to occur,” she added. According to The New York Post, the suit argues that the boycott undermined the marketplace of ideas by financially harming certain viewpoints over others.

    The House Judiciary Committee has also scrutinized GARM, particularly targeting Rakowitz. Internal emails obtained by the committee included one where Rakowitz allegedly bragged about X being “80% below revenue forecasts” since GARM targeted Musk over brand safety issues, a comment he later described as a “self-effacing joke.” The committee’s investigation is examining whether GARM and its members violated Section 1 of the Sherman Antitrust Act, which addresses illegal restraint of trade.

    As reported by The New York Post, GARM has denied the allegations, with a spokesperson calling the claims of anti-competitive behavior “unfounded.” The House Judiciary Committee recently sent letters to over 40 major companies, including Adidas, American Express, Bayer, BP, Carhartt, Chanel, CVS, and General Motors, demanding information about their interactions with GARM and any potential collusion to defund certain news outlets and platforms.

    “This behavior is a stain on a great industry and cannot be allowed to continue,” Yaccarino remarked. The lawsuit represents a significant escalation in the battle over online free speech and advertising practices, spotlighting the tension between major corporations and media platforms over content and brand safety issues.

    Source: The New York Post