Article by By Seb Joseph and Krystal Scanlon • August 13, 2024
Looks like it’s open season on ad industry powerhouses.
First, Elon Musk launched a antitrust legal assault on the World Federation of Advertisers (WFA), accusing the trade group of acting like a mob to block ad dollars from his platform, X. Then, right-wing video platform Rumble jumped in with its own lawsuit against the same group. Now, News Corp sounds like it wants to join the fray with similar intentions.
CEO Robert Thomson revealed last week that he and his team are contemplating legal action against the ad industry, potentially prompting the World Federation of Advertisers to follow Musk’s threats and dismantle the Global Alliance for Responsible Media (GARM).
“We are also considering our legal options in confronting the blatant political bias of advertising industry bodies who have done serious damage and denied many advertisers access to a significant audience,” Thomson told investors on the company’s latest earnings call on August 8. Though he didn’t specify any specific timeline as to when, if any, action may (or may not) be taken.
Both Musk and Thomson in their ire cited the same source: a report from the Republican-led U.S. House Judiciary Committee released on July 10, that implied GARM was a front for a covert, left-leaning group of advertisers aiming to defund conservative media.
“We applaud the work of the U.S. House Judiciary Committee in pursuing the misnomer that is the Global Alliance for Responsible Media or GARM, and its coordinated boycott of media platforms perceived to be unfashionable by illiberal liberals,” Thomson continued during the earnings call. “GARM harm has been real, and there need to be commercial consequences. We believe the company’s prospects are patently propitious, and we are also continuing to review our portfolio with a view to maximizing returns for shareholders.”
These lawsuits are more than just legal skirmishes — they’re part of a broader political drama that could shift depending on the outcome of the U.S. presidential race, as the new administration’s politics will likely influence regulatory and judicial perspectives on these antitrust issues.
According to Josh Rosen, president of Hotspex Media, the outcome of the presidential election will hugely influence things going forward.
“Right-wing media outlets play a significant role in shaping public opinion among conservative audiences, influencing political discourse, and providing a counterbalance to more liberal or mainstream media sources,” he said. “With a sitting left government a lot of this became commonplace. Should there be a swing in power, we can expect the attitudes to change.”
Spokespersons for Rumble and News Corp didn’t immediately return additional requests for comment.
Until then, it seems a mix of businesses, politicians and entrepreneurs see this as a golden opportunity to take on the ad industry’s sway, especially its role in what they claim is a campaign to defund conservative media. It’s a curious stance: condemning advertisers for not backing certain viewpoints while demanding the freedom to express their own opinions without repercussions.
And yet, this stance is spreading unchecked, with few of the industry’s heavyweights daring to confront these lawsuits openly. But who can blame them?
Speaking out not only risks facing another lawsuit but also invites the ire of a vocally aggressive public. Just look at Bud Light: after partnering with transgender influencer Dylan Mulvaney, the brand got entangled in a heated cultural and political debate, leading to a boycott and a significant drop in sales.
That’s bound to be on the minds of CMOs as these lawsuits gain traction.
“People don’t like to be in lawsuits. And it’s pretty hard when it’s the richest man in the world who can sue anybody,” said one industry exec, who exchanged anonymity for candor. “It’s like, am I [advertisers] going to speak up and be on the lawsuit train? I think the majority of brands felt like the Congressional hearings were a bit of a joke. It wasn’t collusion, we were just establishing a framework. But you’ve got Republicans that own 50% of the country saying it’s collusion, and nobody wants to piss off 50% of the country. No one’s comms committee at a big brand is going to allow them to make a comment right now in this hotbed.”
All of this raises the question: is it even legal for advertisers to stage a boycott?
“I haven’t reviewed the complaint, but generally speaking, collective action and boycott agreements among competitors can violate antitrust laws,” said Ricardo P. Cestero, a partner at Greenberg Glusker. Here, however, it’s not clear that is what’s happening.
“More likely what’s happening is that X is unwilling to govern its advertising model in a way that protects advertisers against negative associations (e.g. having company logos appear next to extremist content) and, as a result, advertisers are staying away,” continued Cestero.
“That is a reasonable and pro-competitive justification for staying away from Twitter [X],” he added.
However, winning these cases might be less about the legal victory and more about making life a living nightmare — and costly — for anyone who dares to challenge conservative speech. After all, they could certainly use the cash.
X’s ad revenue has plummeted since Musk’s acquisition nearly two years ago, while News Corp’s business has been shrinking for a decade. What was once nearly half of News Corp’s revenue has now dwindled to just 16%, as the company reported earlier this year.
“Brand safety is a major concern for advertisers who don’t want their ads to appear next to controversial content or to be seen to be supporting a platform that spreads misinformation,” said Jasmine Enberg, vp and principal analyst at eMarketer. “Getting risk-averse advertisers to spend on a platform with extreme content from either side of the political spectrum is a tough sell.”
Read the original DigiDay article here: https://digiday.com/marketing/lawsuits-against-garm-call-into-question-the-politics-behind-brand-safety/
