Amazon Accused of Bilked Billions in Digital Ad Auction Scheme

The Federal Trade Commission (FTC) and 22 state attorneys general filed a lawsuit against Amazon on Monday, alleging that the company manipulated digital advertising auctions to overcharge around 1.2 million businesses by more than $20 billion since 2019.

The complaint centers on three ad products: Sponsored Display, Sponsored Products, and Sponsored Brands, which appear when shoppers search for items on Amazon's retail site. Advertisers bid for those placements through auctions that Amazon publicly describes as competitive.

However, the FTC alleges that this description was false, as Amazon began inserting an undisclosed internal reserve price in 2019, effectively placing a phantom bid on behalf of Amazon itself to drive up the final cost.

The agency claims that Amazon applied this hidden surcharge in 70 to 80 percent of auctions in recent years, causing pay-per-click costs to rise by 50 percent on major shopping days. The extra cost was largely passed along to consumers in the form of higher product prices.