FTC Sues Amazon Over Alleged Ad Auction Manipulation
The U.S. Federal Trade Commission (FTC), the country’s trade regulator, has sued e-commerce giant Amazon, accusing the company of secretly inflating the prices of online advertisements and extracting hundreds of billions of dollars in excess payments.
The joint lawsuit was filed in a federal court in Washington state, with 22 U.S. states joining the FTC as co-plaintiffs.
The lawsuit alleges that since 2019, Amazon has manipulated auctions for advertisements displayed on its search pages, secretly collecting more than $20 billion in additional payments from advertisers without their knowledge.
Alleged Secret Pricing Tactics
According to the lawsuit, Amazon violated the standard rules governing auctions for advertisements displayed when users search for products on its platform. Under the common practice in digital advertising, the price is generally determined based on the bid submitted by the second-highest bidder. However, Amazon allegedly interfered with around 80 percent of its auctions and charged winning advertisers the full amount of their highest bids.
The FTC claims that this secret practice severely harmed at least 1.2 million businesses and small and large sellers that regularly promote their products on the platform. It further alleges that higher advertising costs ultimately forced ordinary consumers to pay more for products.
Amazon Denies Allegations
The Seattle-based technology company has formally denied all of the regulator’s allegations. In a statement, Amazon said its auction system is highly competitive and that product relevance, rather than bid price alone, receives the greatest consideration when selecting winning advertisements.
Amazon also disputed the FTC’s claims, saying the average cost per advertising click did not increase between 2019 and 2024. The company further claimed that its technology helped advertisers save around $8 billion between 2021 and 2025.
Amazon currently controls the world’s third-largest digital advertising market, behind Google and Meta. However, following news of the latest legal challenge, the company’s shares fell by around 2.5 percent in the stock market.
//DBTech/BMT/OR//
