FTC Sues Amazon for Alleged $20 Billion Ad Auction Manipulation Scandal

The Federal Trade Commission (FTC) has sued Amazon for allegedly manipulating its advertising auction systems to overcharge businesses placing ads on its platform. The lawsuit, joined by 22 state attorneys general, targets sponsored products, brands, and display advertisements sold against search results on Amazon's retail site.

The FTC alleges that Amazon changed its auction rules in 2019 without notifying advertisers, adding an undisclosed surcharge called a 'soft reserve price' that raised the minimum price businesses had to pay to win ad placements. According to the complaint, Amazon began entering its own hidden bid into auctions to push prices higher, a practice executives tracked internally and sought to limit outside awareness of.

The FTC alleges that this strategy raised pay-per-click costs by 50% on major shopping days and pushed up floor prices between 70% and 80% of the time in recent years. Amazon's ad practices are under scrutiny as the company generated over $68 billion from advertising last year, ranking behind only Google and Meta in global digital ad revenue.