FTC alleges Amazon illegally made $20 billion by rigging billions of ad auctions

The Federal Trade Commission (FTC) and 22 states have filed a lawsuit against Amazon, alleging that the company has been "secretly and systematically" overcharging advertisers since 2019. The lawsuit claims that Amazon has engaged in a "secret ad surcharge scheme," which has allowed the company to illegally generate approximately $20 billion by manipulating ad auction results. According to the FTC, Amazon replaced actual ad-auction results with inflated prices set by the company, resulting in higher advertising costs for businesses. FTC Chairman Andrew Ferguson stated that the higher advertising prices imposed by Amazon were "largely passed on to American consumers." The lawsuit alleges that Amazon's practices violate the FTC Act and over a dozen state laws. This legal action follows nearly a year after Amazon settled a previous FTC lawsuit concerning its Prime subscription practices for $2.5 billion. The current lawsuit underscores ongoing concerns regarding Amazon's advertising practices and their impact on both advertisers and consumers. The FTC's complaint details how Amazon's "second price" auctions, which are intended to ensure that the winning bidder pays only slightly more than the next highest bid, have been manipulated to benefit Amazon financially. The allegations suggest that the company's deceptive practices have persisted and continue to affect the advertising landscape on its platform. The lawsuit highlights the FTC's commitment to addressing unfair practices in the digital advertising space.