The stunning antitrust lawsuit filed by Elon Musk’s X against a now-disbanded advertising cartel and several brands it accused of colluding to boycott is an important step in fixing a “broken” ecosystem, X CEO Linda Yaccarino said on Tuesday.
In an interview with The Washington Post, Yaccarino shed new light on Company X’s decision to wage a legal “war” against the Global Alliance for Responsible Media, which was abruptly shut down just days after the social media company filed its lawsuit last week.
The left-leaning nonprofit and other defendants are accused of orchestrating a boycott of X, causing the site to lose “billions of dollars in advertising revenue.”
“We have become the victim of a small minority of people who want to impose their authority and competence and monopolise what they can monetize,” Yaccarino said.
“GARM was just a symptom, [finding] That’s what this lawsuit is about, the root causes of the destruction of the entire ecosystem.”
Yaccarino, the former chief advertising officer at NBCUniversal, said X’s goal is to bring “light” to the issue and lead a move toward greater transparency about the data and processes advertisers use to decide where to spend their money.
“It’s important to find out exactly what happened and why or where this was a personal bias and whether that was a factor in advertiser investment decisions,” Yaccarino said.
X’s lawsuit, filed in federal court in Texas, is expected to continue against GARM’s parent company, the Federation of World Advertisers, whose members control 90% of global marketing spend.
The WFA cited strained nonprofit resources as the reason for its decision to shut down GARM, which is fighting the antitrust lawsuit.
In addition to GARM and WFA, other major companies including CVS Health, Mars, Orsted and Unilever are named as defendants. X is seeking treble damages and an injunction.
Yaccarino said the lawsuit came as a “direct result” of evidence uncovered by the House Judiciary Committee, which accused GARM executive Robert Rakowitz and others of orchestrating a campaign to restrict advertising to a number of news outlets and online platforms, including The Washington Post.
The House committee report detailed one instance in which Rakowitz appeared to boast that X was “underperforming revenue projections by 80%” as GARM targeted Musk over brand safety concerns. Rakowitz told investigators that the email was intended as a joke.
The House Judiciary Committee then sent letters to more than 40 companies demanding that they provide information and preserve evidence regarding any transactions with GARM.
Further legal action is not the company’s goal, but Yaccarino said Company X has not ruled out suing other companies if more evidence emerges in the future.
“We want to be clear that companies are free to make decisions about their advertising,” she said, “but the law does not permit a small group of advertisers to band together to mount a boycott.”
Yaccarino maintains that Company X’s relationships with advertisers remain strong despite the ongoing legal battle, saying that “a lot of people have reached out to me with support” since Company X announced its move.
X’s chief pointed to several recent events that demonstrate the value of the site’s audience, including Musk’s widely watched interview with former President Donald Trump on Monday night and President Biden’s decision to announce in a tweet that he is withdrawing from the 2024 election.
Yaccarino added that upcoming products, such as Company X’s highly anticipated payments processor, will also be attractive to advertisers.
“X has become something completely different over the past 18 months, becoming an indispensable platform with users around the world spending more of their time and lives on the platform,” she said.
Yaccarino has led the company through a period of intense turmoil since taking over as CEO in mid-2023.
The company’s struggle to reach mainstream advertising has intensified as Musk overhauled the business and raised concerns that his loosening of content moderation practices had allowed anti-Semitic posts and other harmful content to spread.
According to multiple reports, the situation escalated last fall, when a group of advertising executives pressured Mr. Yaccarino to resign during a conference call on Nov. 18. Mr. Yaccarino acknowledged that the incident took place.
Despite the turmoil, Yaccarino said he’s focused on X “more than ever” and is excited about the company’s product pipeline.
“I’m exactly where I need to be,” she said, “and X is at the heart of the culture and I’m here to drive business outcomes for people.”
