Scoop: X sues major brands, ad industry group for antitrust

Catch up quick: GARM was created by members of the World Federation of Advertisers (WFA) in 2019 to set standards around brand safety for digital advertisers. Members include major tech companies, advertisers, agencies, ad tech firms and advertising coalitions.

• Last month, conservatives on Capitol Hill held a hearing to address complaints from conservative media firms, mainly the Daily Wire, that GARM was colluding with ad-buying giant GroupM to discourage clients from buying ads on their sites because of conservative politics.
• The lawsuit references a report published earlier this month by the Republican-led House Judiciary Committee that argues that GARM used "shadowy corporate coordination" to silence conservatives.

Zoom in: The lawsuit, which was filed in the U.S. District Court for the Northern District of Texas, argues GARM "conspired, along with dozens of non-defendant co-conspirators, to collectively withhold billions of dollars in advertising revenue from Twitter, Inc. ("Twitter," now X Corp.)."

• A copy of the lawsuit obtained by Axios alleges GARM triggered "a massive advertiser boycott" when it conveyed to its members concerns about compliance from Twitter, now X, with its standards, after Musk acquired the platform in 2022.
• "These actions were all against the unilateral self-interest of the advertisers; they made economic sense only in furtherance of a conspiracy performed in the confidence that competing advertisers were doing the same," the complaint reads.

What they're saying: On Tuesday, X CEO Linda Yaccarino alleged in an open letter to advertisers that GARM's "behavior is a stain on a great industry, and cannot be allowed to continue."

• "It's also clear that there are likely others who suffered at the hands of this activity. This case is about more than damages - we have to fix a broken ecosystem that allows this illegal activity to occur."

The big picture: The lawsuit is part of a broader effort by X to litigate its way through advertising challenges.

• X last year sued the progressive watchdog group Media Matters for defamation after the group released a report that X says misrepresented the amount of hate speech users encounter on its platform. That lawsuit has been scheduled for trial next year.
• X also sued the consumer advocacy group Center for Countering Digital Hate, but a judge tossed that case.

State of play: Rumble on Tuesday said it would join X in its lawsuit against WFA, GARM's parent, but added that it would also be suing WPP and its subsidiary GroupM.

• WPP is one of the world's largest ad agencies. GroupM is one of the biggest ad-buying firms. Communications between GroupM and GARM were targeted during the congressional hearing on the issue last month.

By the numbers: X's advertising business has taken a significant hit since Musk purchased it in 2022. The company is expecting to earn roughly $2 billion in advertising revenue this year, a source told Axios.

• That's down from the $4.5 billion in ad revenue that the company earned in 2021, the last full year that X, formerly Twitter, was publicly traded.
• In its lawsuit, X argues the boycott and its effects "continue to this day, despite X applying brand safety standards comparable to those of its competitors and which meet or exceed those specified by GARM."

What to watch: GARM is considered a helpful tool by many players in the ad industry, letting them hand off to a third party potentially controversial calls about the acceptability of particular advertising environments.

• It's unlikely that Congress would intervene in an intra-industry dispute between GARM and X or any other publisher. A court could choose to litigate the case further, or it may choose to toss the lawsuit.

Editor's note: This story is developing.