Elon Musk's X is fighting back against what his firm says in an illegal cartel of ad agencies seeking to close down key media outlets.
Linda Yaccarino, the CEO of X, said in a letter to advertisers Tuesday the company has filed a lawsuit against GARM (Global Alliance for Responsible Media) and its members after their financial boycotts of the social media site caused harm to customers and the company.
"After a career in media and advertising, I thought I had seen everything," Yaccarino, who joined the company as CEO in 2003, said in a video she posted to X.
"Then I read the U.S. House of Representatives Judiciary Committee's report entitled 'GARM's Harm' last month," she said.
"The report disclosed that their investigation had found evidence of an illegal boycott against many companies, including X."
The report also revealed that GARM and members "directly organized boycotts and used other indirect tactics" while targeting disfavored platforms like X, as well as content creators and news organizations to demonetize them and to limit choices for consumers, said Yaccarino.
In a report Tuesday, the Federalist suggested the X lawsuit has merit.
"Section 1 of the Sherman Act explicitly prohibits organizations from conspiracy against commerce or 'restraint of trade,'" the Federalist said.
"The consequence — perhaps the intent — of this boycott was to seek to deprive X's users, be they sports fans, gamers, journalists, activists, parents or political and corporate leaders, of the Global Town Square," said Yaccarino.
"To put it simply, people are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott."
X has named GARM, the World Federation of Advertisers, and GARM members CVS Health, Mars, Orsted, and Unilever in its lawsuit, filed Tuesday.
In the lawsuit, which X filed in the U.S. District Court for the Northern District of Texas, the company argues that GARM "conspired, along with dozens of non-defendant co-conspirators, to collectively withhold billions of dollars in advertising revenue from Twitter, Inc. (now X)," reports Axios.
The lawsuit alleges that GARM started a "massive advertiser boycott" by conveying concerns to its members about X complying with its standards after Musk bought 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 lawsuit reads.
Yaccarino said the alleged "illegal behavior" of the organizations "cost X billions of dollars."
Later Tuesday, the video-sharing platform and cloud services provider Rumble announced that it had joined the lawsuit.
In its filing, also to the Northern District of Texas, Rumble named as defendants the WFA as well as the advertising agency WPP and its subsidiary, GroupM Worldwide.
In a press release, Rumble asserted that GARM used those one-size-fits-all standards to perpetrate an advertiser boycott against Rumble and other platforms.
"The brand safety standards set by advertisers and their ad agencies should succeed or fail in the marketplace on their own merits and not through the coercive exercise of market power," Rumble's complaint read.
GARM is backed up by partner and supporting media monitors in the U.S., including the left-wing NewsGuard.
After GARM launched its initiative to target conservative media globally, NewsGuard announced its was offering its service to brands to back up such efforts.
The House Judiciary Committee found that four major ad agencies — IPG, Omnicom, WPP, and Publicis Groupe — were shown to have received U.S. taxpayer dollars through federal contracts, according to a review of federal contract data by the Foundation for Freedom Online.
The committee found at the same time that GARM had used its influence over internet revenue streams to pressure platforms hosting controversial speech, revealing that in a number of cases, it punished sites or platforms deviating from speech deemed safe for ad brands.
The committee report said showed GARM was allegedly collaborating with NewsGuard, a news rating service, as well as the Global Disinformation Index in England, both of which blacklist news sources using "ratings" that are deemed unfavorable.
Publicis is an investor in NewsGuard and uses its services to block advertising revenue for conservative media.
NewsGuard is headed by Steven Brill, a longtime Democratic Party operative and donor who has backed Hillary Clinton and Barack Obama, among many liberal candidates.