Unfair prices at auctions? Lawsuit against Amazon because of artificially expensive advertising space

The US competition authority FTC and the attorneys general of 22 states are suing the internet giant Amazon. They accuse the online retailer of artificially increasing prices in auctions for advertising space. Over more than seven years, Amazon probably earned tens of billions in this way, the authority said.

Companies can pay Amazon to have their ads appear in certain search results. An auction decides which company gets the advertising space. According to the FTC, the highest bidder typically only has to pay one cent more than the runner-up. If one company offers $200 and another offers $190, the price would be $190.01. However, in almost four out of five cases of product advertisements, Amazon demanded the full amount of the highest bid, according to the accusation. In doing so, the company violated its own rules.

The FTC also sees evidence of this in internal documents. There is talk of a “hidden surcharge”. In addition, Amazon drove up prices with fictitious auction participants. According to the lawsuit, Amazon made the secret change because the tech company was dissatisfied with revenue from advertising auctions.

FTC Chairman Andrew Ferguson said the higher costs were largely passed on to American consumers. Amazon shares were down around 2.5 percent on Monday.

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