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Amazon responded saying the FTC’s claim ‘fundamentally misunderstands how advertisers behave.’
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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.
Key facts
- This lawsuit comes almost a year after Amazon agreed to pay $2.5 billion to settle an earlier FTC lawsuit over Prime subscription practices
- 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
- 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
- Amazon’s advertising organization (“Amazon Ads”) decided to set and charge customers higher prices for advertising placements itself
Summary
Amazon responded saying the FTC’s claim ‘fundamentally misunderstands how advertisers behave.’. 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. Amazon’s advertising organization (“Amazon Ads”) decided to set and charge customers higher prices for advertising placements itself. The complaint claims this practice “has likely illegally extracted over 20 billion dollars from unwitting advertising customers.” Amazon responded saying the FTC’s lawsuit is “misguided” and claiming that “from 2019 to 2024, the average winning bid for Sponsored Products search ads fell 50%.” It also disputed the FTC’s claim that higher advertising prices were passed on to consumers.