FTC Sues Amazon for $20 Billion Over Secret Ad Auction Price Fixing

The Federal Trade Commission (FTC) and 22 states have filed a federal lawsuit against Amazon, alleging that the company secretly engineered a surcharge system that inflated advertising auction prices by as much as 15 percent. The program, called 'Project Nessie,' was used to extract approximately $20 billion from sellers who had no practical alternative to Amazon's advertising platform.

The complaint alleges that Amazon rigged its second-price auction system, which governs its advertising marketplace, to place an artificial floor below which the company would not accept a winning price. Advertisers paid this floor without being told it existed.

FTC Chair Lina Khan described Amazon's conduct as market manipulation, saying the company had 'built a system to find the precise price point where it could charge more and still keep advertisers from walking away.' Amazon disputed the characterization, stating that its ad platform is designed to deliver value for advertisers and that it competes aggressively for every advertising dollar.

The lawsuit has sparked concerns about the competitive nature of digital advertising. Regulators are questioning whether platforms like Amazon can be made competitive through enforcement alone or if their structures make secret pricing possible.