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Amazon sued by US FTC, 22 states over alleged $20bn ad overcharges
Regulators allege Amazon manipulated ad auctions, hitting 1.2 million customers
MUMBAI:Amazon’s ad auctions are facing a legal storm after the US Federal Trade Commission (FTC) accused the e-commerce giant of secretly raising the minimum prices advertisers had to pay to promote their products.
The FTC, backed by a bipartisan group of 22 US states, alleged in a lawsuit filed in the Western District of Washington on Monday that Amazon systematically inflated advertising auction prices without telling customers, causing $20 billion or more in losses.
According to the regulator, Amazon allegedly raised the minimum price required to place product-promoting ads, allowing it to generate billions of dollars in additional profits at the expense of advertisers.
The FTC said advertisers were harmed by the higher prices, while the states involved in the case could seek civil penalties and attempt to recover some of the alleged losses.
Amazon has rejected the allegations.
In a blog post, the company said its advertising policies are designed to show shoppers relevant ads and argued that the economics of its advertising business do not support the FTC’s claims.
Amazon said its average cost per click for advertisers remained flat between 2019 and 2024, while the sales generated from those clicks increased.
The company also defended its broader pricing practices, saying its approach was inconsistent with any suggestion of consumer harm. Amazon said it offers low prices across a wide selection of products and works to ensure its retail and grocery prices match or beat those of competing retailers.
The lawsuit adds another major regulatory challenge for Amazon as its advertising business becomes an increasingly important source of revenue. The case could also put greater scrutiny on how major digital platforms conduct ad auctions and determine what advertisers ultimately pay.
For Amazon, the dispute is about more than a few extra cents in an online bid. If the FTC’s allegations hold up in court, the price of playing in its advertising marketplace could become a much bigger problem.
