FTC Lawsuit Alleges Amazon Systematically Overcharged for Ads
The FTC and 22 state attorneys general are suing Amazon, alleging the company used a "secret ad surcharge" to systematically inflate advertising prices on its platforms.
The Federal Trade Commission (FTC) and 22 state attorneys general have filed a lawsuit against Amazon. The complaint alleges the e-commerce giant used a "secret ad surcharge" to systematically inflate advertising prices across its platforms.
According to FTC Chair Andrew Ferguson, the higher advertising prices "were largely passed on to American consumers." The lawsuit claims Amazon violated the FTC Act and more than a dozen state laws. This legal action follows nearly a year after Amazon agreed to pay $2.5 billion to settle a previous FTC lawsuit concerning its Prime subscription practices.
The complaint details Amazon's "second price" auction system for ads on its platform, where the winning bidder is supposed to pay one cent more than the second-highest bid. The FTC alleges Amazon uses this mechanism covertly to generate greater revenue and maintain competitive pricing, even as it increases advertisers' actual ad spending.
Amazon's alleged practices have distorted competition in the advertising market and led to higher ad costs, ultimately impacting consumer prices, according to the suit. The FTC is seeking legal remedies to halt Amazon's alleged violations of competition laws and ensure fair competition in digital advertising.