Amazon Sued for Alleged Overcharging of Advertisers
The Federal Trade Commission (FTC) and 22 states have filed a lawsuit against Amazon, alleging that the company has been overcharging advertisers since at least 2018 or 2019. According to the complaint, Amazon represented to advertisers that it held a 'second price auction,' but in reality, charged them higher prices after the auction ended.
The suit alleges that Amazon's practice of inflating online search ad auction prices has cost companies 'tens of billions of dollars' extra in advertising costs. Amazon internally refers to this difference as an 'auction surcharge.' However, the company does not disclose this surcharge to its customers, making it a hidden fee.
Amazon has issued a statement denying the allegations and stating that it had properly described how its auctions work to advertisers. The company claims that advertisers adjust their bids based on real-world outcomes, not just descriptions of auction mechanics.