Elon Musk’s X Sued an Advertising Coalition. Now It’s Shutting Down.

Technology|Advertising Coalition Shuts Down After X, Owned by Elon Musk, Sues

An influential advertising industry group said it would shut down after being sued this week by X, Elon Musk’s social media company, according to an email sent to its members and obtained by The New York Times.

The Global Alliance for Responsible Media, a nonprofit coalition of major advertisers led by the World Federation of Advertisers, told its members it would cease operations two days after Mr. Musk accused the group of orchestrating a boycott against X. The lawsuit claimed that the group, known as GARM, had violated antitrust laws by coordinating with brands to dissuade them from spending money on the social media platform.

While the World Federation of Advertisers denied that GARM’s work had run afoul of the law, it said that the nonprofit did not have the financial resources to continue operating while it fights X in court. The World Federation of Advertisers, which is also named in the lawsuit, will remain operational.

Stephan Loerke, the chief executive of the World Federation of Advertisers, told members in an email that, while he was “confident that the outcome will demonstrate our full adherence to competition rules in all our activities,” GARM would shut down its operations immediately.

“This decision was not made lightly, but GARM is a not-for-profit organization, and its resources are limited,” Mr. Loerke wrote. The email was previously reported by Business Insider.

At X, the news that GARM would shut down was celebrated. “No small group should be able to monopolize what gets monetized,” Linda Yaccarino, X’s chief executive, said in a post. “This is an important acknowledgment and a necessary step in the right direction. I am hopeful that it means ecosystem-wide reform is coming.”

The dispute stemmed from Mr. Musk’s $44 billion purchase of X, then known as Twitter, in 2022. Mr. Musk promised a new era of unrestricted speech and annulled many of the platform’s rules against hateful content and misinformation. In response, many brands pulled their ads from X, fearing that they would damage their brands by appearing alongside unsavory posts.

GARM was formed after a video of the 2019 mass shooting in Christchurch, New Zealand, was livestreamed on Facebook. Advertisers converged and joined the nonprofit to pressure social platforms to adopt stricter content moderation policies. In the wake of Mr. Musk’s acquisition, GARM recommended that advertisers pause their spending, and several major companies, including CVS and Unilever, did so. Those two companies were also named in X’s suit.

GARM “conspired” with leading brands to “collectively withhold billions of dollars in advertising revenue” from the social media company, according to X’s lawsuit, filed Tuesday in a federal court in Texas.

While the bulk of X’s revenue comes from advertising, Mr. Musk said he would wage war against brands that boycotted the platform.

“We tried being nice for 2 years and got nothing but empty words,” Mr. Musk wrote Tuesday in a post on X. “Now, it is war.”

Tiffany Hsu contributed reporting.