Ad Group Shuts Down After Being Sued by Elon Musk’s Company

Businessman Elon Musk arrives at the Tenth Breakthrough Prize Ceremony at the Academy Museum of Motion Pictures in Los Angeles on April 13, 2024. (Etienne Laurent/AFP via Getty Images)

A group of advertisers is shutting down due to a lawsuit from Elon Musk’s X Corp.

“Today we announce that GARM will discontinue its activities,” the World Federation of Advertisers said on Aug. 9.

The federation runs the Global Alliance for Responsible Media (GARM), which includes major corporations such as Mastercard and Unilever. It said it has allowed advertisers to avoid having their ads run next to illegal or harmful content.

X in a suit on Aug. 6 said that GARM conspired with dozens of companies to withhold money from the company, which was formerly known as Twitter.

After Musk acquired X in 2022, companies asked GARM about a possible boycott, according to the suit. “GARM conveyed to its members its concerns about Twitter’s compliance with GARM’s standards, triggering the massive advertiser boycott that followed,” it stated.

“This is not a decision we took lightly, but it is a direct consequence of their actions,” X CEO Linda Yaccarino said. “The illegal behavior of these organizations and their executives cost X billions of dollars.”

In a statement, GARM said the suit triggered the group’s shutdown.

“GARM is a small, not-for-profit initiative, and recent allegations that unfortunately misconstrue its purpose and activities have caused a distraction and significantly drained its resources and finances. GARM therefore is making the difficult decision to discontinue its activities,” it said.

Musk noted the development, writing in an X post that he believed GARM was attempting to hide damning documents with its move.

The World Federation of Advertisers and its co-defendants have not formally responded to the suit.

One company said in a 2023 email to GARM officials, obtained by the U.S. House of Representatives Judiciary Committee, that “based on your recommendations, we have stopped all paid advertisement, because the platform was rather unsafe due to Elon Musk’s decision of firing a lot of ressources [sic] etc, and therefore little control over the content on the platform.”

Rob Rakowitz, one of the GARM officials, responded that GARM did not recommend stopping advertising on X. He also told committee members that GARM did not make that recommendation. But Rakowitz also said that monthly GARM calls did not touch on Musk’s acquisition of Twitter, even though in an email a World Federation of Advertisers employee wrote that a call had recently included an “extensive debriefing and discussion” of Musk’s “takeover of Twitter.”

In another missive, Rakowitz said people may recognize him as “the idiot who challenged Musk on brand safety issues,” adding that, “since then, they are 80% below revenue forecasts.”