The FTC says Amazon rigged its ad auctions to squeeze out extra profit - and stuck shoppers with the bill.
The FTC and attorneys general from 22 states sued Amazon on August 31, alleging the company ran a secret ad surcharge that inflated advertising prices on its website and app. The complaint centers on Amazon's second-price ad auctions, where the winning bidder is supposed to pay just one cent more than the next-highest bid - but Amazon allegedly charged more than that. FTC chairman Andrew Ferguson wrote in a blog post that the inflated ad costs "were largely passed on to American consumers." The agency says the practice violates the FTC Act and more than a dozen state laws.
Advertising has become one of Amazon's most profitable businesses, and sellers who buy those placements tend to fold the cost into what they charge shoppers. If the FTC's math holds up, a pricing mechanism pitched as fair to advertisers turned into a quiet markup on everyday purchases. It's also the second major FTC case targeting Amazon's core business practices in under a year.
Amazon already paid $2.5 billion last year to settle a separate FTC lawsuit over Prime sign-up and cancellation tactics - this one suggests regulators are still finding places to look.