FTC lawsuit alleges Amazon has been ‘secretly and systematically’ overcharging for ads
The FTC and 22 state attorneys general are suing Amazon, alleging the company used a 'secret ad surcharge' to manipulate auction prices and inflate advertising costs. Amazon denies the claims, arguing that average ad prices have actually decreased over the last five years.
Why it matters
This lawsuit represents a major antitrust challenge against Amazon's advertising business model and its impact on consumer prices.
The FTC and 22 state attorneys general are suing Amazon for allegedly using a “secret ad surcharge” to drive up prices for ads on its website and app. FTC chairman Andrew Ferguson claims in a blog post on the lawsuit that the higher advertising prices “were largely passed on to American consumers.” According to the complaint, Amazon violated the FTC Act and over a dozen state laws. This lawsuit comes almost a year after Amazon agreed to pay $2.5 billion to settle an earlier FTC lawsuit over Prime subscription practices.
In Amazon’s “second price” auctions for ads on its platform, the winning bidder is supposed to only pay one cent more than the second-highest bidder. However, the FTC’s complaint alleges that Amazon has been “manipulating” the auctions since 2019:
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