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

Key Points:

• The FTC and 22 states sued Amazon for secretly overcharging about 1.2 million advertisers since 2019 by manipulating ad auction prices on its platform, allegedly extracting over $20 billion through hidden surcharges.
• Internal documents revealed Amazon replaced actual auction results with higher prices via a "soft reserve price," a secret surcharge undisclosed to advertisers and even some Amazon employees, continuing the practice despite the FTC investigation.
• Amazon defended its auction system, stating it uses reserve prices to reflect true market value and that advertisers never pay more than their bids, while claiming the FTC cherry-picked information and that average ad costs remained flat when adjusted for inflation.
• The FTC argues Amazon's lack of clear disclosure about its reserve pricing system deceives advertisers, inflates advertising costs beyond what competitive auctions would produce, and ultimately harms sellers and consumers through higher fees and prices.
• The lawsuit seeks a permanent injunction, civil penalties, restitution, and other relief to stop Amazon’s alleged deceptive practices, with the case filed in the US District Court for the Western District of Washington.