The FTC’s Merger Shakedown
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Not long after Elon Musk bought Twitter, a nonprofit advertising group recommended that brands stop advertising on the platform. The group was known as GARM, the Global Alliance for Responsible Media. It was made up of big companies and advertising groups. The idea, which began after the live-streamed Christchurch shooting in 2019, was to make sure that companies weren't advertising next to hateful or offensive content.

The advertisers were wary of Musk and his plans for Twitter. He had talked a lot about wanting to roll back content moderation, get rid of some content moderation rules altogether. Kate Conger is a New York Times reporter who also co-wrote a book about Musk's Twitter takeover. And then in the aftermath of him buying the platform, a bunch of different researchers documented a rise in hate speech there.

So the folks at Garm thought, you know what? We don't need our brand's ads sitting next to hate speech. Advertisers are notoriously very, very skittish about where their brands appear online. They don't want to be appearing alongside anything that's remotely controversial. So at that point, a lot of advertisers put a pause on their spending just to kind of wait and see what Musk would do and how his tenure owning the platform would go.

And how did that shake out for him in terms of bringing in ad dollars? So it wasn't great. And there were a couple points very early on in the acquisition where he held calls with advertisers and these sort of accountability groups that will advise advertisers about where to spend their money. And then very quickly, he decided, you know what, never mind, this isn't worth my time.

They can go if they want to go. They can stay if they want to stay, whatever. And sort of pulled back from engaging with advertisers and, you know, began the layoffs, et cetera, started getting rid of content moderators. And so Twitter's advertising revenue started to fall off a cliff at that point.

I'm asking Kate about this now because this incident paved the way for a remarkable move at the Federal Trade Commission this week. Kate broke the story that the FTC set political conditions on a massive merger between two advertising giants. They can merge, the FTC says, if they agree not to boycott any media platforms because of those platforms' political content.

Sound familiar? There is a clear line from Elon Musk's fight with Garm to this policy.

These are two of the four largest advertising groups in the world. And they've agreed to this condition to not make political decisions based on advertising. And so it sort of restricts them as a new agency, as these agencies merge, from making the kind of recommendation to their clients that GARM made to advertisers back in the wake of the takeover, saying that they should take a pause.

Today on the show, how the FTC is wielding politics as both a carrot and a stick in the Trump administration. I'm Lizzie O'Leary, and you're listening to What Next TBD, a show about technology, power, and how the future will be determined. Stick around. ♪

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The two agencies at the heart of this merger, Omnicom Group and Interpublic Group, are two of the largest ad agencies in the world. And they work with some of the world's biggest brands, helping them figure out where and how to spend their money. So, um...

you know, let's say if you suddenly get a massive advertising budget for the podcast and you don't know where's the best place to spend that, whether you want to put it into Google ads or Facebook or, you know, you want to put a billboard on the side of the freeway, you would hire an ad group like this and they would kind of advise you about where to put that budget and kind of get into the nuts and bolts of placing those ads for you. Since a lot of this is like

particularly complicated and not very transparent to the average person of how to go and actually buy an ad on a social media platform. I think what's interesting here and what, as someone who covered the FTC a million years ago, the normal antitrust scrutiny would be, gee, here are two very big companies. If they want to merge, does that make them monopolistic in their market? Do they have too much market power?

But that does not seem to be what the FTC is interested in in this case.

And, you know, the FTC may well have looked at that stuff and decided, you know what, it's fine for these two ad firms to merge and it's not going to affect competition in this space. But what they're asking these two companies to agree to is basically this provision to not engage in political boycotts. So, like you said, very far removed from what we might normally think would be a consideration here that, you know, these two ad firms merging together might create this, like, all

ultra-dominant force in the advertising space. And so what would the companies have to do to abide by this? So they basically have to agree to not make recommendations based on political content of the websites or social media platforms where they're advertising. So that leaves a big

loophole in this agreement, in my opinion, because clients can still say, you know, I don't like the politics of this social media service or, you know, this website or whatever. I don't want my ads there. And the agency can still do what the client has told them to do and not place ads there. But the agency itself can't make those recommendations, can't make those determinations as an agency to say, you know what?

we've determined that this site or this platform is too politically risky. And so we're going to advise to all of the brands that advertise with us that they don't want to be there. So I'm just making up an example here. Coca-Cola could say, we don't like this. It's just that advertising agency A or B can't say, hey, Coke, you don't want your content here. Right.

I want to talk a little bit about the FTC as it is being imagined right now. Trump's pick to lead the agency, Andrew Ferguson, has said that spending pullbacks by advertisers amount to illegal boycotts.

It's a very muscular position from an FTC chair. The last FTC chair, Lena Kahn, also took fairly muscular positions, but this seems to be a very different interpretation of what the agency's purview is. What do we know about Andrew Ferguson?

So Andrew Ferguson is relatively new to the agency. He is a Trump appointee. And like you said, he has talked about this online advertising ecosystem and what he views as quote unquote censorship in that ecosystem as a really existential threat.

to online speech and conservative online speech in particular. And it's sort of an advancement of concerns that conservatives have had about social platforms for a long time. They think that these platforms are dominated by ultra-rightists

ultra-liberal, woke people in Silicon Valley who are choosing over and over again to censor their voices or to keep them out of the mainstream discourse. And so that's been a fear for a long time. Ferguson's position has basically been that these online forums for speech have become so important and so essential for communication that it's essential for all

all voices to be there and to fight back against this kind of quote unquote censorship that the right has felt in the last couple of years. And, you know, the way to do that is to go after the money and the advertising revenue that is funding these spaces.

And thinking about that in an antitrust way is what, collusion on the part of advertisers? Is that the argument that they would make? Yeah, the argument is it's a little wonky, but it's basically that all of these advertisers have kind of gotten together behind closed doors and colluded to manipulate the advertising market.

And so that's sort of the application of an antitrust lens that's going into this. Ferguson claimed that drying up advertising will dry up the idea, I'm quoting here, so that the risk of an advertiser boycott is a pretty serious risk to the free exchange of ideas. And this is a really interesting way, I think, to think about online speech, right? Because

You could agree with that sentiment, but you could also say the government saying, no, you can't spend your money in this way or that way is the government impeding free speech as well. Like, it just feels like we're at sort of two different ends of a free speech conversation.

Yeah, totally. And I think one of the things that has sort of gotten us into this like screwball legal situation that we find ourselves in now is a mistake of the way that we have built the internet, right? You know, all these founders of social platforms,

built them with this idea of enabling free speech and enabling people to come together and speak their mind. Twitter in particular, right? This was a platform that was always kind of inherently pursuing political conversation and wanted to be a voice for protests and political movements. And...

So that's kind of been the pitch, right, that these are free speech spaces. However, they never had a revenue plan that was tied to that. And so, you know, all of these social platforms are like speech forums with an ad business bolted on. And that doesn't really make sense, but it's sort of like been...

The way that all of these companies were pushed, it was like the easy money that they could find for revenue when they were trying to grow.

And, you know, trying to make their angel investors happy with their returns. And so it's been a puzzle for conservatives as they've tried to push back on these companies because, you know, they're not government agencies, right? They don't really... They're private companies. They're private companies and they can moderate speech however they want. They are not obligated to hold...

up any of these sort of free speech values that they've promoted and talked about. And they can, you know, they can change their corporate values on a dime. And so it's been really tricky, I think, for people to find out a way to force these companies to allow all these different kinds of speech that they want to have on the platforms. When we come back, even more Elon Musk connections. Because, of course.

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That's drinktrade, T-R-A-D-E dot com slash TBD for 50% off your one month trial. drinktrade.com slash TBD. How much of this would you say stems from this incident in

2023, Media Matters puts out a report showing that ads on X were shown next to anti-Semitic content. Advertisers say like, I'm not sure I really want my ad next to that. Elon sues the company afterwards. Now they, Media Matters, are being investigated by the FTC. Like, is that the genesis of this? Is Elon the genesis of... Like, I'm trying to figure out what's the...

Where the idea that

there was collusion with advertisers, where that began, where the kernel of that germinated? Yeah, that's an interesting question. So we have two things going on here, right? One is the FTC's approval of this merger on the condition that this new mega agency not boycott. And the other thing that's going on is they're investigating Media Matters and a host of other kind of advertising advocacy groups for potentially, you know, influencing boycotts, convincing advertisers

to pull their funding. And I think that there is an amount of that that stems from, you know, the whole Twitter debacle, right? I mentioned earlier, Musk was having these calls with advertisers and with these kinds of advocacy groups. And where he was getting the most pushback about content moderation on these calls was from these advocacy groups who were saying, you know,

And Twitter, the company you bought, has made all of these commitments to all these different communities that they're going to police hate speech and protect these communities online. Are you going to uphold that? Are you going to continue to do the things that this company once committed to or are you going to quit? And so those are the people that were really, really pushing him on that. But I think also like there's a big part of this.

issue for Twitter or now X that was self-inflicted, right? The Media Matters report came out several days after Musk had gone on the platform himself and endorsed an anti-Semitic conspiracy theory. So that was like a really big plummet for advertising already. And then the Media Matters report comes out and shows, okay, ads are running next to neo-Nazi content, next to anti-Semitic content. But

The headline at that point wasn't, you know, ads are next to these bad tweets that, you know, have one or two retweets or maybe not the most popular accounts. It was the most popular account on the platform. Elon Musk's account is going out there and endorsing anti-Semitic conspiracy theories.

You know, because you have spent so much time covering this industry, how important advertising is to social networks. I mean, yes, now X is a private company and we don't have its financials the way we did when it was a public company. Does this advertising issue break through to the public at all? Or are they just like,

yeah, this platform does this and this platform does that. And they only notice it if they get like the same ad for Il Makiage cover up 30 times. Yeah. I mean, I think like,

this stuff is kind of inherently boring. And so it's hard for people to wrap their minds around or to care about it. Because it's like, you know, if I'm a social media user and I'm having a good experience online, I'm talking to my friends, everyone's there, I'm getting good engagement on whatever I'm posting, I probably don't care what the advertising model is, right? And so I think

It's easy for your average user, just the general public, to ignore where all of the money is coming from that is fueling the whole experience and the ways that that financing can be sort of a political choke point. It seems to be becoming a bigger and bigger political choke point. No.

not just at the FTC, but also when we look at the FCC and Brendan Carr and how he is interacting with larger media companies. This feels very much like a do it our way or we're not going to let you do business. Do you think that's a fair assessment?

Yeah, I mean, I think that that is sort of a message, you know, more broadly in the second Trump term, right? You know, it's this ad merger, this ad investigation, but it's also these investigations, you know, on...

Grants being canceled for Harvard University, investigations into ActBlue, all of these truces that have been drawn up with various elite law firms to say, you know, you're going to, you know, not do this kind of business anymore or whatever. And so there is a lot of like little bits and pieces going on right now that are trying to, I think, influence and change the way

businesses and institutions that have been perceived as promoting, you know, left-wing causes are now kind of facing retribution to their businesses. And not just left-wing causes, like cancer research.

Right, right. Yeah. And I think, you know, it's the perception, right? The perception that Harvard is like this elite institution and, you know, all this sort of like campus culture stuff in general of like, this is where young people are going and getting indoctrinated to the liberal way of thinking. And we need to do something about that. I think that there's a lot of those kinds of talking points that are motivating some of this stuff. So if the Omnicom Interpublic Conference

merger proceeds apace, what happens next? Like, do they just have to make these concessions in order to do business? And if that happens, does that mean the advertising that you or I or any user sees, does that become demonstrably different?

Not necessarily. I mean, so they've agreed to this. Omnicom and IPG have agreed to this term, you know, and the merger is moving forward pending, I think, some other regulatory approvals overseas. And if anything, maybe it makes the quality of advertising on X better, frankly. You know, a lot of the ads that a user will see on X right now are copyrighted.

are kind of weird. It's like weed gummies, Bitcoin scams, just kind of like, yeah, yeah. Kind of just lower quality ads. And if this forces, you know, more prominent advertisers back onto the platform and you're seeing ads again for something like Coca-Cola or Apple or whatever, you know, maybe that's a better overall user experience. But, you know, it's, it,

It's odd that it takes sort of a government regulator to come in and force these brands to potentially be appearing on a platform where they don't want to appear and they are being placed next to content that they find questionable. And I guess that's the final test, right, is what

the companies that would be buying the ads what they actually want whether what they do changes because they can still say meh no thanks right they could still say no thanks they could say you

You know, we don't want to work with this new mega agency for whatever reason. We're going to switch. There's other options that these brands have. They don't necessarily have to go along with this, but, you know, they very well might. We've seen a lot of businesses kind of making changes to appease the Trump administration, whether that's, you know, running their ads on X or rolling back DEI policies or something else.

Kate Conger, as always, it's great to talk to you. Thank you. Yeah, thank you so much. Kate Conger covers technology for The New York Times, and she is a co-author of the book Character Limit, How Elon Musk Destroyed Twitter.

And that is it for our show today. What Next TBD is produced by Evan Campbell and Patrick Ford. Our show is edited by Elena Schwartz. TBD is part of the larger What Next family. And if you like what you heard, the best way to support us is to sign up for Slate Plus. You get all your favorite podcasts ad-free, including this one. Just head on over to slate.com slash whatnextplus to sign up.

One quick programming note, we are off on Friday for the 4th of July, but we'll be back next Sunday with a whole new episode. I'm Lizzie O'Leary. Thanks so much for listening.

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