FTC and 22 States Sue Amazon Over Alleged Secret Ad Price Manipulation
FTC Alleges Amazon Rigged Ad Auctions
The Federal Trade Commission, joined by 22 state attorneys general, has filed a lawsuit alleging that Amazon systematically overcharged advertisers through a covert manipulation of its advertising auction system.
How the Alleged Scheme Worked
According to the complaint, Amazon allegedly exploited its "second price" auction model—a system where the winning bidder is supposed to pay only one cent more than the second-highest bid. The FTC claims Amazon replaced actual auction results with artificially higher prices set directly by the company, effectively imposing a hidden surcharge on advertisers.
The lawsuit states that Amazon's "deception continues to this day," with the alleged overcharges dating back to 2019. The FTC estimates the company profited by approximately $20 billion through this scheme.
Impact on Consumers and Advertisers
FTC Chairman Andrew Ferguson indicated in a statement that these inflated advertising costs "were largely passed on to American consumers"—a common dynamic in e-commerce where higher advertising expenses can translate into higher product prices. The complaint alleges violations of the FTC Act as well as more than a dozen state laws.
Context and Previous Actions
This lawsuit arrives roughly a year after Amazon agreed to pay $2.5 billion to settle an earlier FTC lawsuit concerning Prime subscription practices. Together, the cases represent significant regulatory scrutiny of Amazon's business practices and pricing mechanisms.