Amazon Sued Over E-Commerce Advertising Practices

The US Federal Trade Commission (FTC) and 22 state attorneys general have filed a lawsuit against Amazon over its e-commerce advertising practices. The complaint alleges that Amazon's changes to its ad auction model without notifying merchants led to tens of billions of dollars in losses for advertisers over the past seven years.

Amazon, the world's third-largest online advertising provider behind Google and Meta Platforms, uses a service called Product Ads to enable merchants to promote their products in its search engine. The company also offers Sponsored Products, which allows merchants to run ads for specific items in Amazon search results, as well as Sponsored Brands, which enables the promotion of multiple products in a single ad.

The FTC claims that Amazon switched from a second-price auction model to a first-price auction without informing advertisers. This change made it more difficult for bidders to avoid excessive ad spending and led to higher costs for consumers.