FTC and US states are suing Amazon for advertising price manipulation

Washington. The US competition authority FTC and several states are suing the Internet giant Amazon over allegations of artificially expensive advertising space. Over seven years, the company secretly drove up prices at advertising auctions and probably earned tens of billions of dollars, the authority said. The attorneys general of 22 states joined the lawsuit. Amazon firmly rejected the allegations.

“These higher costs were largely passed on to American consumers,” said FTC Chairman Andrew Ferguson. If one of the world's largest online retailers engages in unfair practices, the consequences could be devastating, Ferguson said. The group's shares were down around 2.5 percent on Monday.

According to the FTC, the highest bidder does not have to pay the actual price of his bid, but only one cent more than the runner-up. This means: If one company bids $200 and another bids $190, the first company only has to pay $190.01 for the advertising space purchased. When advertising products, Amazon collected the full bid from the first place in almost four out of five cases, according to the accusation - and thus violated its own rules.

According to the FTC, there is also evidence of this practice in company documents that refer to a “hidden markup.” In addition, the group itself drove up the prices with fictitious auction participants. According to the lawsuit, Amazon made the secret change because the tech giant was unhappy with revenue from advertising auctions.

Amazon said in a lengthy statement that the lawsuit was based on a fundamental misunderstanding of the advertising market. Neither consumers nor advertisers were harmed. In its more than 150-page complaint, the FTC provides no evidence of increased end consumer prices. In fact, inflation-adjusted click prices for advertisers remained stable between 2019 and 2024, while average winning bids even fell by 50 percent over the same period.

The group further explained that when it comes to ad placement, it is not just the highest bid that counts, but is increasingly focusing on AI-supported relevance for customers. That's why around 92 percent of the advertising space didn't go to the highest bidder, which has saved advertisers billions over the years. The use of minimum prices is also standard practice in the industry, and no advertising customer ever pays more than their predetermined maximum bid.

Amazon also accused the competition authority of selectively selecting a few, outdated training materials and emails that were taken out of context from around 1.5 million pages examined in order to create the false impression of deliberate deception. Amazon said it would defend its position in court.