The US Federal Trade Commission (FTC) and 22 states sued Amazon on August 31, alleging the company secretly raised prices in auctions for Sponsored Products, Sponsored Brands, and Display ads by adding a hidden surcharge starting in 2019.

The complaint said Amazon told more than 500,000 small and medium-sized businesses they were buying ads through a second-price auction.

The FTC alleged Amazon then introduced a “soft reserve price” and an “invented auction participant” that pushed advertisers to pay more, with Sponsored Products advertisers charged their full winning bid close to 80% of the time.

The FTC said the practice affected more than 1 million brands and sellers and may have generated tens of billions of dollars in additional revenue for Amazon.

Amazon called the case “misguided” and said advertisers are properly informed about pricing.

The agency’s filing seeks a permanent injunction and monetary relief. The case adds to broader FTC pressure after the agency sued Amazon in 2023 over allegations that it illegally maintained monopoly power.

Amazon’s 2024 annual report also reported advertising services as a distinct revenue line.

🔗 Source: TechCrunch

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