Amazon Accused of Hiding Billions in Advertising Auction Charges

Amazon is facing a consumer-protection lawsuit accusing it of secretly manipulating advertising auction prices on its platform, generating more than $20 billion in unlawful charges. The US Federal Trade Commission (FTC) and attorneys general from 22 states filed their complaint in the US District Court for the Western District of Washington on August 31.

The FTC alleges that Amazon told advertisers their bids were resolved through a second-price auction, but secretly added a concealed charge that could push the winner's price towards its own bid. This practice allegedly began in late 2018 after Amazon became dissatisfied with ad revenue generated by auctions.

Internal documents quoted in the complaint describe 'a surcharge hidden in it'. The senior vice-president responsible for Amazon Ads is alleged to have said that the second price was not set by an actual bidder but by 'a proxy 2nd price that we calculate'. Another document referred to an 'invented auction participant' used to increase the price.

The complaint cites internal warnings that transparency could cause 'irrevocable damage to advertiser trust' and a 'downward spiral' in bids and advertising spend. Notes from a 2024 discussion between senior executives reportedly described the system as a 'clever non-transparent way to charge first price' and an 'incredibly effective way to drive revenue'. The proportion of occasions on which an advertiser paid its own bid rose from between 30% and 40% in 2021 to approximately 80% in 2024.