Tensions rise as WFA grapples with Musk’s lawsuit, splitting members

Some members are eager to settle so the lawsuit disappears and distance themselves from Musk, apprehensive about how his accusations play out in the fraught debate over corporate expressions of progressive values — especially in light of the uproar over Bud Light’s association with a transgender influencer.

Other members are determined to stand firm, fearing the dangerous precedent that would come from the world’s biggest advertisers bending to the whims of a politically divisive billionaire.

Until earlier this month, these tensions mainly simmered behind closed doors, limited to internal disputes within the trade group, said two of the ad execs.

That all changed when X announced that Unilever had been dropped from the lawsuit — seemingly fracturing the WFA’s united front.

Emphasis on “seemingly,” as no party has explicitly confirmed how Unilever resolved the matter. Instead, X’s communications team certainly implied a settlement in their commentary on the announcement. They said X had reached an agreement with Unilever and was pleased “to continue our partnership with them on the platform.”

That word “partnership” is doing heavy lifting here, especially given that one side started this tussle in a bid for financial support.

Without the specifics of Unilever and X’s resolution, other WFA members are questioning whether their peers will follow Unilever’s lead and broker their own partnerships with Musk, especially given he named three other WFA members in the lawsuit: Mars, CVS Health and renewable energy firm Ørsted. Like Unilever, they might choose to step back into the shadows.

“This is less about whether they’re trying to beat or appease Musk, more about the fact that their lawyers have made some calculation that litigation is essentially not worth the hassle,” said one of the sources close to the trade body.

It’s not just the cost of litigation that weighs on them — remember, these organizations are sitting on mountains of cash. No, the real concern lies in the reputational risks they must consider, weighing the potential backlash of aligning with Musk against the pitfalls of a prolonged legal battle.

“The political landscape now is difficult for everyone, and Elon Musk has made it clear that he wants to push a certain agenda,” Claire Atkins, co-founder and CEO of Check My Ads, a non-profit ad watchdog, explained.

So far, this agenda has been advanced with all the subtlety of a battering ram, framed around the concept of free speech. X CEO Linda Yaccarino even published an open letter suggesting that the boycott by WFA members is an attempt to deprive people of access to the platform.

In contrast, the WFA has kept a low profile — especially after closing the Global Alliance of Responsible Media (GARM) just days following Musk’s lawsuit put the initiative in its sights.

Granted, this silence can arguably be attributed to its legal entanglement, but the void it created has become a breeding ground for speculation about a potential fallout.

“It feels like the organization is trying to lay low,” said a WFA member with knowledge of those discussions.

They noted that after receiving the initial email informing everyone about the shutdown, there has been nothing but radio silence. To make matters worse, they find themselves inundated with requests for intel from other companies that should be more knowledgeable. Chances are, this lull will persist until the lawsuit is resolved. Take, for example, its flagship annual Global Marketer Week event — next year’s gathering has been moved from Mumbai, India, to Brussels, Belgium.

“You’re already starting to see that the WFA is starting to feel more like a quiet working group than a big statement organization — something that’s likely to continue until the fallout from this lawsuit is complete,” said the WFA member.

It’s a hyperbolic claim, for sure, but given the circumstances, it underscores a deeper concern about the organization’s current trajectory.

The WFA is missing two of its most influential voices: Unilever’s evp of global media and global head of media for its beauty and well-being brands Luis Di Como, and Procter & Gamble’s vp of global media Gerry D’Angelo, who co-chaired the WFA’s Media Forum. Both execs played pivotal roles in shaping the WFA’s approach to working with platforms on issues like brand safety and transparency.

To make matters worse, GARM lead Rob Raskowitz is also exiting at the end of the year, leaving the organization to navigate these choppy waters without some of its most influential voices.

“It’s unfortunate that the WFA is in this position,” said D’Angelo. “That said, it doesn’t have a choice but to see this lawsuit through to its conclusion.” His former counterpart at Unilever, Di Como, did not respond to a request for comment.

The prospect of Republican U.S. presidential candidate Donald Trump winning a second term in November only complicates matters, given his administration’s favorable stance toward Musk and his interests. This alignment could create an even tougher legal landscape for the WFA, to the point where those close to the organization believe its overseers might choose to fold rather than engage in a long, costly court battle — especially if they end up facing an administration that’s less likely to sympathize with their case.

“No one thinks the WFA will survive litigation backed by a sitting president. If that happens, I think the WFA will fold preemptively and potentially start something else with a new mandate and new structure,” the WFA member said.

The mere fact this is even a possibility underscores just how abnormal this lawsuit really is.

At its core, this case hinges on an alleged antitrust violation, specifically whether the defendants orchestrated a boycott against X, said Matthew Polesetsky, a partner at Foundation Law Group.

Without solid proof of a conspiracy that stifles competition, individual advertisers are free to make their own choices — after all, no one is obligated to throw their ad dollars Musk’s way. However, they’re likely to find themselves engulfed by a sea of costly and time-consuming depositions and document requests, all in the name of bolstering that First Amendment defense claiming a ruling in favor of X would infringe on their right to avoid content they deem distasteful.

“For that reason, a victory by X could have a chilling effect on the exercise of free speech rights,” said Polesetsky. “At the end of the day, any victory by X will likely be pyrrhic and short lived — it is not a sustainable business plan to sue your potential customers into doing business with you.”

Should the WFA survive, it’s likely to be fundamentally changed.

In fact, that transformation has already begun. It began back in 2020, when corporate activism became more prominent, and conservative voices began pushing back harder. Caught in the middle were CMOs — and by extension, the WFA — who had previously talked up marketing as a force for good, only to now find themselves at the heart of cultural tug-of-war, juggling the risk of alienating either socially conscious consumers or the conservative backlash waiting to pounce with their own idealistic views on marketing.

Just look at the recent firestorms around Bud Light, Target and Disney, all caught in the crosshairs for leaning into progressive messaging, only to face fierce resistance from the right.

“These are brands that are sophisticated,” said Atkins. “They have built their brands over decades. They are trusted by the general public. They stand by the quality of their products, and they stand by the quality of their operations. They have standards and they don’t like to deal with unpredictable business partners.”

Both the WFA and X declined to comment on this article.