Using in situ grazing-incidence x-ray scattering, we have measured the diffuse scattering from islands that form during layer-by-layer growth of GaN by metal-organic vapor phase epitaxy on the (1010) m-plane surface. The diffuse scattering is extended in the (0001) in-plane direction in reciprocal space, indicating a strong anisotropy with islands elongated along [1 $overline{2}$ 10] and closely spaced along [0001]. This is confirmed by atomic force microscopy of a quenched sample. Islands were characterized as a function of growth rate G and temperature. The island spacing along [0001] observed during the growth of the first monolayer obeys a power-law dependence on growth rate G$^{-n}$, with an exponent $n = 0.25 pm 0.02$. Results are in agreement with recent kinetic Monte Carlo simulations, indicating that elongated islands result from the dominant anisotropy in step edge energy and not from surface diffusion anisotropy. The observed power-law exponent can be explained using a simple steady-state model, which gives n = 1/4.