FTC and 22 States Sue Amazon over Hidden Ad Auction Surcharge
The suit targets the auction mechanism itself, arguing the second-price auction advertisers were told about was not what they got, and the hidden surcharge meant the price was set by Amazon rather than by the market.
Reporting from 1 source: GIGAZINE.
The FTC and 22 state attorneys general filed suit against Amazon, alleging the company secretly inflated ad auction prices and may have defrauded advertisers of $20 billion or more. The complaint says Amazon changed auction rules without notice starting in 2019, adding a hidden "soft reserve" surcharge on top of the published second-price auction. Amazon calls the claims "clearly wrong" and says it harmed no one.
The complaint quotes an Amazon Ads executive saying the price advertisers paid was "not determined by actual bidders, but a fictitious second price calculated by Amazon." A separate document cited in the suit shows Amazon used fictitious auction participants to push prices up, and an employee said the surcharge produced prices "beyond what competition among advertisers could achieve."
Amazon kept the changes hidden, raising the surcharge gradually so the inflation would not draw attention. For Sponsored Products ads, the share of advertisers paying the full winning bid grew from 30 to 40 percent in 2021 to roughly 80 percent in 2024.
Synthesized by Yomimono from the 1 cited source below, including Japanese-language reporting where cited, then editorially reviewed before publishing.