Amazon Faces Advertising Auction Allegations
Amazon faces a major lawsuit over its Amazon ad prices from the US Federal Trade Commission and 22 states. The regulators accuse the company of manipulating advertising auctions. The case focuses on Sponsored Products, Sponsored Brands, and Display ads. These formats allow sellers to bid for prominent positions across Amazon’s shopping platform. The FTC says the alleged practices affected more than one million brands and sellers. More than half of those businesses were small or medium-sized companies.
According to the complaint, Amazon changed its auction system without clearly informing advertisers. Regulators say the company used an invented auction participant to increase winning bids. Under the earlier model, winners would pay slightly more than the second-highest bid. The FTC alleges Amazon instead used another mechanism to raise the final price.
FTC Seeks Changes From Amazon
The complaint claims the number of advertisers paying more than expected increased sharply. Regulators say the share rose from roughly 30% to 40% in 2021. By 2024, that figure reportedly reached around 80%. The FTC says this increase effectively doubled the number of affected advertisers.
The agency also cited internal Amazon discussions in its complaint. Those documents allegedly show executives discussing ways to increase advertising revenue. Amazon strongly disputes the allegations. The company called the lawsuit misguided and said the FTC misunderstood its advertising auctions. Amazon also argues that soft reserve prices represent a normal practice within the advertising industry. However, the case could move toward trial if both sides fail to reach an agreement. The FTC and participating states want Amazon to stop the alleged practices. They also seek compensation for advertisers who may have paid excessive amounts. The lawsuit could therefore have wider implications for digital advertising. It may also influence how major online marketplaces design their advertising auctions.
