FTC accuses Amazon of running a ‘secret ad surcharge scheme’ in new lawsuit
A new lawsuit alleges that Amazon implemented a 'soft reserve price' and used fake bidders to artificially inflate advertising costs for over a million sellers. The FTC claims this practice, which began in 2019, deceived businesses that believed they were participating in a transparent second-price auction.
Why it matters
The case challenges the transparency of digital advertising auctions, which are central to the revenue models of major tech platforms.
Amazon is facing a new lawsuit from the Federal Trade Commission (FTC) and 22 states, which accuse the company of secretly charging businesses more for advertising on its platform.
The lawsuit, filed Monday, claims Amazon spent more than seven years quietly increasing the prices advertisers paid through its online ad auctions. According to the complaint, the alleged practice affected more than one million brands and sellers and may have generated tens of billions of dollars in additional revenue for Amazon.
The 22 states joining the FTC are Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont, and Washington.
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