Amazon Sued for Alleged Price Gouging on Advertising Platform
Amazon is facing another major regulatory headache after the Federal Trade Commission (FTC) and 22 states filed a lawsuit against the e-commerce giant for allegedly overcharging advertisers on its platform.
The FTC claims that Amazon has been engaging in 'deceptive and unfair practices' since at least 2015, using its market dominance to secretly inflate prices in online search advertising auctions. The issue centers around the company's use of second-price auctions, where the winner pays just one cent more than the next-highest bid.
However, Amazon allegedly charged advertisers their full winning bid about 80% of the time, resulting in tens of billions of dollars being extracted from unwitting advertising customers. The FTC estimates that over one million brands and sellers were required to pay inflated prices for ad placements on the platform.