Amazon Accused of Secretly Overcharging Advertisers by $20 Billion
US trade regulator and 22 states have accused Amazon of secretly overcharging advertisers on its website, leading to higher costs for customers. The Federal Trade Commission (FTC) says this 'ad-rigging scheme' has resulted in more than $20bn in hidden surcharges since 2019.
The agency alleges that Amazon's advertising auction system, called 'second-price auctions', lets the winning bidder pay only slightly more than the second-highest bid. However, regulators claim Amazon could secretly raise the second-highest bids with a higher 'shill' bid of its own.
Amazon generates over $68bn in ad revenue on its website each year and has millions of advertising customers, including over 500,000 small- and medium-sized businesses. The company's advertising business has grown significantly in recent years, becoming the third-largest online advertising marketplace after Google and Meta.
The lawsuit aims to bar Amazon from continuing the allegedly deceptive advertising practices, along with paying civil penalties and refunding advertisers.