Hey everybody. Welcome back to the Elon Musk.
Podcast this. Is a show where we discuss.
The Critical. Crossroads that shape SpaceX
Tesla X. The Boring Company and
Neurolink. I'm your host, Will.
Walden. The Global Alliance for
Responsible Media or GARM, which is an influential group within
the advertising sector, has reportedly suspended its
operations now. This happened in the wake of an
antitrust lawsuit filed by Elon Musk's social media company X,
formerly known as Twitter, and the decision to halt Garms
activities was communicated to members by the World Federation
of Advertisers on Thursday, which is the WFA.
An internal e-mail reported by Business Insider reveals that
the WFACEO emphasized the difficulty of the decision,
sending Garms status as a not-for-profit organization with
very limited resources in his communication.
They expressed that the WFA and Garm's intent to challenge the
allegations made by X in court, asserting confidence that the
legal process would confirm their adherence to competition
rules. However, despite this
confidence, the resource constrains faced by GARM have
necessitated the suspension of its operations for now, and the
lawsuit in question was filed by X in the US District Court for
the Northern District of Texas, accusing GARM of conspiring to
withhold advertising revenue from the platform.
Rumble Inc, a video sharing platform similar to YouTube,
also joined X in the legal action, alleging that a
coalition of advertisers and agencies orchestrated by GARM
had conspired to block ad revenue from flowing to certain
platforms, including X. Now.
The lawsuit specifically targets the WFA, advertising giant WPP
and its subsidiary Group M Worldwide, among others.
Now, Rumble's official account on X shared a post stating
Rumble has joined X to sue a cartel of advertisers and AD
agencies who conspire to block ad revenue from going to certain
platforms and content creators. Now, this legal action has
escalated tensions within the advertising industry,
particularly regarding how ad revenues are distributed and who
controls their decisions. Now, Garms suspension marks a
temporary victory for Musk and X, even though no court filing
has been made yet. Now the CEO of X, Linda
Yacarino, expressed on X that the suspension of Garms
activities is a crucial step towards what she hopes will be a
broader reform across the advertising ecosystem.
She said no small group should be able to monopolize what gets
monetized. This is an important
acknowledgement and necessary step in the right direction.
But despite this, the lawsuit may have unintended consequences
for X's advertising business. The founders of a watchdog group
called Check My Ads Institute, or CMAI, warned in an op-ed that
the lawsuit could further alienate advertisers from X.
They argued that everyone can see that advertising on X is a
treacherous business relationship for advertisers.
Now, this could cause some unease.
And the core of X's complaint lies in the allegation that GARM
organized a collective effort to withhold billions of dollars in
advertising from Twitter, particularly after Musk's
acquisition in late 2022. This action, according to X, was
motivated by concerns within GARM that the platform had
strayed from established brand safety standards under Musk's
leadership. Now, GARM, which was established
in 2019, was originally created in response to incidents like
the Christchurch mosque shootings in New Zealand, where
the perpetrator live streamed the attack on Facebook.
The group was designed to help advertisers avoid having their
content up here alongside illegal and harmful material,
and over the years, GARM claimed to successfully reduce the
prevalence of such problematic ads from six point 1% to just
one point .7% between 2020 and 2023.
Now, concerns about brand safety resurfaced when Musk took over
Twitter, as his more relaxed approach to content moderation
led to fears among advertisers that their ads could be placed
next to misinformation. Hate.
Speech and other objectable content.
These concerns have led to a significant drop in advertising
revenue for the platform, which remains heavily reliant on ads
as its primary source of income. Now, Musk's approach to handling
advertisers has been contentious, to say the least.
He has openly clashed with brands that have pulled their
spending from X, sometimes using aggressive rhetoric.
For instance, last year he responded to advertisers leaving
the platform with a very blunt message.
He said go F yourselves. Now.
This confidential stance has not only strained relationships with
advertisers, but also further stabilized X's ad revenue
stream. Now, despite occasional claims
from X's leadership that the platform's ad business is
improving, the lawsuit against GARM suggests ongoing
difficulties. Linda Yacarino from X
acknowledged in a video release Monday that the alleged
conspiracy to boycott X posed a severe threat to the company's
future, saying that the loss of advertising dollars has placed
the platform quote at long term risk.
Now, the shutdown of Garam may have broader implications for
the advertising industry, though, particularly for other
watchdog groups. Now, the case echoes previous
legal actions taken by X under Musk's leadership, where the
company has targeted organizations that it perceives
as adversarial to its business interests.
Now X has also filed lawsuits against the Center for
Countering Digital Hate, or CCDH, and Media Matters for
America, both of which have raised concerns about the
content on the platform and its impact on advertisers.
The CCDH lawsuit was dismissed by a federal judge who
criticized the suit as an attempt to penalize the
nonprofit for exercising its right to free speech.
However, the ongoing legal battles, including the one with
Media Matters which highlighted the presence of anti-Semitic and
pro Nazi content on X, have already caused significant
damage to X's relationships with major advertisers, some of whom
pulled their ads following those reports but garms closure.
While a short term victory for Musk NX raises questions about
the future of advertising self regulation.
This coalition, which was formed with the intent to create and
enforce standards around brand safety, has not been sidelined,
has now been sidelined by the very forces it sought to
regulate. And as a result, there may be a
chilling effect on similar initiatives within the industry,
as other organizations may fear similar legal reprisals.
Now, the broader impact on X's business remains uncertain.
It hasn't been that long, and the platform's advertising
revenue has already suffered a nearly 50% decline since Elon
Musk acquired it. That's a downturn that's driven
in a large part by concerns over content safety and the
suitability of the platform for major brands.
Musk's direct involvement in promoting content that many
advertisers find objectable has only exacerbated those concerns,
leading to further erosion of trust between X and its
advertisers. Hey, thank you so much for
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