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Amazon sued by FTC and 22 states over alleged ad auction manipulation
The Federal Trade Commission (FTC) and 22 state attorneys general have filed a lawsuit against Amazon, alleging the company engaged in deceptive practices to secretly inflate advertising prices for over seven years. The complaint, filed in the U.S. District Court for the Western District of Washington, claims Amazon manipulated its online search advertising auctions to extract tens of billions of dollars from advertisers.
According to the FTC, Amazon represented its marketplace as using a 'second-price' auction system, where the winner pays only one cent more than the second-highest bid. However, the lawsuit alleges that since 2019, Amazon implemented an undisclosed 'soft reserve price'—effectively acting as a phantom bidder—to drive up costs. This practice allegedly converted many auctions into 'first-price' auctions, where advertisers pay their full bid. The FTC claims this occurred in approximately 79% to 80% of auctions in 2024, a significant increase from roughly 4% in late 2020.
The legal action impacts an estimated 1.2 million advertising customers, including more than 500,000 small and medium-sized businesses. The FTC notes that these increased costs are often passed down to consumers. Amazon has denied the allegations, stating the lawsuit is misleading and asserting that the company will defend itself in court.
Entities
Amazon · Andrew N. Ferguson · Anthony G. Brown · FTC · Federal Trade Commission · Western District of Washington
Claims
What the coverage asserts, and how many sources carry each claim.
- [● 4 SOURCES] Amazon's alleged scheme has extracted tens of billions of dollars from advertising customers. www.business-punk.com · www.epochtimes.com · fourweekmba.com · thebaynet.com
- [● 3 SOURCES] Since 2019, Amazon allegedly introduced an undisclosed 'soft reserve price' to manipulate auctions. www.business-punk.com · www.epochtimes.com · fourweekmba.com
- [● 4 SOURCES] The alleged practices affect approximately 1.2 million advertising customers, including over 500,000 small and medium-sized businesses. www.business-punk.com · www.epochtimes.com · fourweekmba.com · thebaynet.com
- [● 4 SOURCES] The FTC and 22 state attorneys general filed a lawsuit against Amazon in the Western District of Washington. www.business-punk.com · www.epochtimes.com · fourweekmba.com · thebaynet.com
- [○ 1 SOURCE] The FTC alleges Amazon used these tactics to increase revenue due to dissatisfaction with existing advertising income. www.epochtimes.com
- [● 2 SOURCES] Amazon denies the allegations, stating the lawsuit is misleading and that the company will defend itself in court. www.business-punk.com · www.epochtimes.com
- [● 4 SOURCES] Amazon allegedly used this method to increase minimum prices in 70% to 80% of auctions. www.business-punk.com · www.epochtimes.com · fourweekmba.com · thebaynet.com
- [● 3 SOURCES] The lawsuit alleges Amazon converted second-price auctions into first-price auctions by charging advertisers their full bid. www.epochtimes.com · fourweekmba.com · thebaynet.com