Amazon Faces FTC Lawsuit Over Alleged Price Manipulation in Advertising Auctions

Amazon is facing a lawsuit from the Federal Trade Commission and 22 states alleging that the tech giant secretly inflated prices for advertisers on its platforms. The FTC alleges Amazon used hidden surcharges in online advertising auctions, potentially extracting tens of billions of dollars from over one million advertisers.

More than 500,000 of those advertisers were small to midsize businesses, according to the FTC. The case centers around ads that appear alongside Amazon search results, including sponsored products and display ads.

The FTC alleges Amazon told advertisers they were participating in 'second-price' auctions but secretly changed its pricing system in 2019 to allow for undisclosed 'soft reserve prices.'

Amazon disputes the allegations, saying its current advertising system has saved advertisers billions of dollars. The company calls the lawsuit 'misguided' and plans to defend its practices in court.