FTC Sues Amazon, Alleging Ad Price Manipulation

The Federal Trade Commission and attorneys general from 22 states sued Amazon for overcharging its advertising customers by allegedly manipulating ad auctions.

Advertisers promoting their products on Amazon’s marketplace buy ad spots where the price is set in auctions. In the complaint, the FTC and the states allege Amazon added an extra charge to bids in order to raise the price that advertisers paid above what one employee said could be achieved by “advertiser competition” alone.

Amazon said in response that the FTC’s claim “fundamentally misunderstands how advertisers operate,” noting that “advertisers adjust bids based on real-world performance.” It said “in no scenario does an advertiser pay more than their bid.” Amazon also said it was “patently false” that Amazon tried to deceive anyone.

The FTC also presented evidence that Amazon took several steps to conceal that it was inflating auction prices from advertisers. The complaint says the practice started in 2018 and continues on to this day, and that it likely resulted in advertisers overpaying by tens of billions.

The lawsuit is reminiscent of antitrust cases against Google which accused that company of also manipulating ad auctions, in both its search advertising business and its advertising technology business. Google lost both cases.

The suit is at least the third lawsuit the FTC has filed against Amazon in the past few years, including a major case alleging the tech giant illegally monopolized ecommerce. As part of that case, the FTC called the advertising fees Amazon charges merchants “monopoly rents.” That case is expected to go to trial next year. Amazon settled a separate case with the FTC last year; this one centered on Amazon’s alleged practice of tricking customers into signing up for Prime accounts and making it difficult to cancel.