FTC investigates Amazon, Google over search ad pricing practices

The US Federal Trade Commission is investigating Amazon and Google over how they handle search ads on their platforms.

The probes focus on whether the companies properly disclosed terms and pricing for ads to advertisers.

The FTC is reviewing Amazon’s use of “reserve pricing” in auctions for sponsored search ads, and is examining Google’s internal ad pricing processes and whether price changes were clearly communicated.

These investigations fall under the FTC’s consumer protection unit.

Amazon generated US$56 billion from its ad business last year, which includes search ads, video, and display ads.

The FTC has been investigating various aspects of Amazon’s business since 2019, including separate antitrust cases.

Google faces ongoing legal scrutiny from both federal and state authorities over its online ad operations.

🔗 Source: Bloomberg

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Implications, context, and why it matters.

Digital advertising platforms show recurring pattern of pricing opacity issues

The FTC’s dual investigation reveals a concerning industry pattern where major advertising platforms may not fully disclose their pricing mechanisms to advertisers.
Google executives previously acknowledged during a 2023 trial that the company “sometimes tweaked its advertising auctions to ensure the company met revenue targets, often without disclosing any changes to advertisers”1.
Amazon now faces scrutiny over whether it properly disclosed “reserve pricing” for search ads—essentially price floors that advertisers must meet before they can purchase ad space1.
This opacity becomes particularly problematic given these platforms’ market dominance: Google remains the market leader in digital advertising while Amazon ranks as the third-largest online advertising company1.
The timing is significant as Amazon’s advertising business has grown into a $56 billion revenue stream, making pricing transparency increasingly critical for the thousands of sellers who depend on the platform1.
These investigations suggest that as digital advertising has become the dominant form of marketing, the lack of clear pricing disclosure may be allowing platforms to extract higher revenues from advertisers who cannot easily evaluate true costs or compare alternatives.