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FTC and states allege Amazon manipulated ad auctions, overcharging customers
The FTC lawsuit claims the scheme has generated about $20 billion in revenue from advertisers since 2019, and Amazon’s stock fell 2.5% after the filing.
Amazon is facing a lawsuit from the US Federal Trade Commission and a bipartisan group of 22 states that alleges the company manipulated online ad auctions used to set advertising prices, resulting in overcharges to more than a million customers, according to BBC Business.
The complaint, filed on Monday, says the alleged conduct has likely netted Amazon about $20 billion from advertising customers since 2019, and that higher costs may have been passed along to shoppers, harming consumers, the outlet reports.
The filing describes a pricing method Amazon is accused of using in so-called second price auctions, and alleges that Amazon replaces actual auction results with higher prices to increase profits. BBC Business also reports the complaint alleges Amazon charged Sponsored Products advertisers their own winning bid close to 80% of the time.
Amazon pushed back, saying the FTC misunderstands how its ad market works, and arguing that it does not use auction mechanics to set prices in ways that increase harm to consumers. BBC Business adds that Amazon’s shares closed 2.5% lower on Monday, after the lawsuit announcement, and notes the company previously settled an FTC case tied to Prime consent and cancellation issues for $2.5 billion.