Amazon Faces $20 Billion Ad Price-Fixing Lawsuit Over Secret Reserve Prices

Amazon is facing a US lawsuit from the Federal Trade Commission and 22 states over allegations that it secretly increased advertising prices by more than $20 billion.

The FTC claims Amazon told advertisers its sponsored advertisements were sold through a second-price auction while applying reserve prices to increase the amount paid for a click.

In a conventional second-price auction, the winner pays only slightly more than the next-highest qualifying bid, but Amazon allegedly used undisclosed mechanisms to override those results and exploit businesses that submitted high maximum bids.

The lawsuit alleges Amazon's actions resulted in overcharged advertisers who sometimes paid significantly more for their ads than they intended.