Overview
The House Judiciary Committee recently released an interim staff report suggesting that a World Federation of Advertisers initiative might violate U.S. antitrust law. The report focuses on the World Federation of Advertisers ("WFA"), an industry group representing roughly 90% of global advertising spend, and specifically on WFA's Global Alliance for Responsible Media ("GARM") initiative. GARM focuses on what it calls "brand safety," such as making sure a brand’s advertisements do not appear next to a message on a social media platform that the brand does not support. The report alleges that GARM facilitated group boycotts by advertisers of Twitter (now "X"), a podcast, and certain news outlets. The report alleges that "[t]he extent to which GARM has organized its trade association and coordinates actions that rob consumers of choices is likely illegal under the antitrust laws and threatens fundamental American freedoms." The staff's report pledges that the Committee will continue its investigation.
The staff report focuses primarily on an alleged GARM-sponsored or GARM-initiated boycott of Twitter. Certain GARM members reportedly contacted GARM shortly after Elon Musk bought Twitter to raise so-called brand safety concerns. Although the chair of GARM denied specifically discussing Musk's Twitter acquisition, contemporaneous documents appear to undercut his denials. GARM also conducted a survey of GARM's members regarding the acquisition, and shared the survey results with members. Although the report does not clearly link the two, many advertisers withdrew their advertisements from Twitter at the same time GARM was discussing these issues with its members. Elon Musk has cited the report to threaten a lawsuit against the advertisers and to request criminal prosecution by state attorneys general. GARM has stated that its guidance to its members is voluntary.
The report also describes instances where GARM sought to favor certain fact checkers or to have specific advertisements or issues demonetized or disfavored. Finally, the report finishes by noting that GARM continues to work with advertising technology companies to have its policies and views used as guidelines for artificial intelligence tools that would manage advertisements.
Without analyzing here the issue of whether GARM's actions sought to suppress certain content on media platforms, the staff's report is light on what is the antitrust violation it is alleging. It alleges general harm to competition in violation of the Sherman Act Section 1 from "horizontal agreements to restrict output and consumer choice," pointing to the "high market share of GARM" being used to stifle certain viewpoints. The report, however, does not address precedent that supports the right of a boycott for a non-commercial, political or social reason. The report notes FTC v. Superior Ct. Trial Lawyers Ass’n, 493 U.S. 411 (1990), which found that a boycott to provide legal services to force higher fees that would supposedly lead to better legal services for indigent clients could not be justified on social policy grounds because the "undenied objective of [the] boycott was to gain an economic advantage for those who agreed to participate." Yet, the Supreme Court has held that antitrust liability generally cannot flow from First Amendment protected speech. NAACP v. Claiborne Hardware Co., 458 U.S. 886, 926 (1982); see also Bassett v. NCAA, 528 F.3d 426, 433 (6thCir. 2008) ("In order to state a claim under the Sherman Act there must be a commercial activity implicated."); State of Missouri v. National Organization for Women, Inc., 620 F.2d 1301, 1315 (8th Cir. 1980) (holding liability could not be imposed for a boycott designed to influence government behavior). The report seems to suggest strongly that GARM's purpose is a political one (opposition to certain viewpoints), and it does not explain then how those actions do not flow from First Amendment protected speech. If the Committee is serious about the antitrust claims in the staff report, it should have the staff bolster its legal analysis.
In some ways, the report echoes allegations of antitrust violations for ESG initiatives where lawmakers and state attorneys general have threatened antitrust lawsuits against companies that coordinate to meet ESG goals. Here, though, the alleged harm identified is less economic, as the staff focuses on the actions of GARM harming the presence of a diversity of viewpoints, rather than restricting competition by reducing output as alleged in regard to the ESG initiatives. These investigations continue to raise the specter of lawsuits for violation of antitrust laws, but the theories on alleged antitrust violations have not yet been fully fleshed out or tested. The theories are still evolving and may lead to attempts to pass new legislation, so, at this point, companies should remain wary as the investigations themselves can be costly and may reveal embarrassing communications. If a company is planning to work with competitors or trade groups on a politically sensitive topic, it should have policies in place to ensure that any group initiatives and written communications reflect considered judgment of the U.S. antitrust laws.
