Elon Musk’s lawsuit shatters GARM, revealing Industry’s fracture and fear

The “shift” in question is the unraveling of the Global Alliance of Responsible Media (GARM), a voluntary committee setting industry standards. Its overseers at the WFA made the call to dissolve it after Musk’s lawsuit accused GARM of acting like a mob. “The decision was not made lightly,” Stephan Loerke, CEO of the WFA, told members in an email first reported by Business Insider and later seen by Digiday. But with GARM being a not-for-profit with limited resources, there was no alternative.

So, that’s it. No more GARM. It’s been discontinued with immediate effect and it’s not clear when or if it will return. All it took was a self-described free speech advocate who believes he can say whatever he wants on his own platform but resorts to expensive lawsuits to silence critics.

If — and it really is an if at this point — this really is the end of GARM then it sets a concerning precedent.  

It signals that powerful individuals or entities can dismantle industry standards and accountability through legal action, undermining collective efforts to tackle crucial issues like brand safety and ethical practices. Worse, this erosion of established frameworks could embolden other influential figures to challenge such organizations, further destabilizing the industry and eroding its capacity to self-regulate and maintain responsible standards.

“It’s a wake-up call that the unpredictability and volatility associated with self proclaimed governing bodies and greed, coupled with Musk’s decisions and ego can have serious repercussions that ripple throughout our industry,” said Josh Rosen, president of Hotspex Media. “We need to take this seriously and consider the long-term stability and values of the platforms we choose to associate with and the platform owners need to show some great respect and appreciation for the planners and buyers.”

CMOs might argue that this is exactly why the industry is in its current mess. They witnessed X’s values shift dramatically after Musk’s takeover and responded by pulling their ad dollars. So much so, in fact, that X’s ad revenue has plummeted to $114 million, according to The New York Times. To grasp the scale of this collapse, consider that in 2021 — before Musk’s acquisition — X’s total global revenue was $5 billion. Yet, in reacting this way, CMOs may have only fueled Musk’s resolve to use government power to prod the world’s largest advertisers into endorsing speech they fundamentally oppose.

So far, it hasn’t worked — and it probably won’t. 

The WFA has vowed to fight Musk’s allegations in court and is confident about a favorable outcome. 

Legal experts concur. 

Take Ricardo P. Cestero, a partner at Greenberg Glusker, for example. He points out that advertisers have a legitimate, pro-competitive reason for avoiding X due to brand safety concerns, like their logos appearing alongside extremist content. Moreover, these companies’ First Amendment rights allow them to distance themselves from speech that could harm their business, further weakening the lawsuit’s chances, he added.

But this isn’t just about winning in court. If it were, Musk wouldn’t have sued GARM in the first place. This is really about a reputational and financial win for Musk.

By targeting an industry body like GARM, Musk taps into a broader narrative that resonates with those who see the ad industry as part of a larger conspiracy against certain conservative values. For his supporters, this campaign isn’t merely about challenging specific standards; it’s about casting Musk as a hero fighting against what they view as an elitist, anti-American establishment.

It’s all there in the raucous cheer for Musk’s triumph over GARM in a culture war far beyond the courtroom.

Linda Yaccarinno, CEO of X, said the lawsuit filed on Tuesday was an “important acknowledgment and a necessary step in the right direction” despite the fact that GARM hasn’t really been active as an organization for over a year.

Even Chris Pavlovski, the CEO of Rumble Video (the platform which chose to join X by suing GARM for “witholding advertising revenue from Rumble and other digital media platforms”) posted that this official downfall of the nonprofit “is what winning looks like.”

Then there was a post from the Republican-led House Judiciary Committee, arguably the originators of this debacle, which called GARM’s demise a “big win” for the “First Amendment” and “for oversight”. 

They began investigating whether GARM members were illegally colluding to defund conservative platforms last year, and last month released a report titled, “GARM’s Harm: How the World’s Biggest Brands Seek to Control Online Speech.” The title says it all.

The issue with that title is it overlooks Musk’s actions since he took over X in the fall of 2022. He’s slashed the content moderation team and loosened policies on what’s allowed on the platform. Despite numerous opportunities, he’s failed to address advertiser concerns about these changes. As a result, his decisions have only deepened the ad revenue crisis. And that brings us right back to the lawsuit.

“It’s unfortunate that Musk is taking so many anti-advertiser actions, and that general tone is sure to discourage advertisers of all sizes from placing ads on X,” said Chris Rigas, vp of media at Markacy.  

It would be a mistake to dismiss Rigas et al’s critique of GARM as if it never faced issues—it did. At one point, there were real concerns that it had been hijacked by opportunistic ad tech firms, turning it into an opaque “scorecard” that muddled its true mission of guiding brands through responsible media buying. Yet, these issues never crossed into anything truly nefarious.

“The thing Musk craves above all else is attention and adulation,” said Christopher Spong, associate director of social media and communications at Collective Measures. “So the best thing for the ad industry to do is ignore him and his platform, a la Don Draper’s, ‘I don’t think about you at all.’”

That this is happening while some of the industry’s loudest, and most influential voices, watch on in silence is telling. Musk isn’t a joke to them any more. He’s someone to fear. That much is clear from the internal tensions at the WFA. The last thing these CMOs want is to be at the center of their own partisan firestorm. 

“I’m worried about GARM,” said one ad exec, who exchanged anonymity for candor on what they know of the internal discussions at the WFA. “But I’m even more worried about the effect this could have on the organization of the WFA and its membership.”

Musk’s blatant disregard for traditional media power exposes a critical weakness in the ad industry’s influence. The silence of key players and the turmoil within the WFA highlight a stark reality: they’re up against a disruptor who’s not just challenging their models but actively dismantling them.

Or as Yaccarino put it, hoping that it — the downfall of GARM in this case — “means ecosystem-wide reform is coming.”