FTC Accuses Amazon of Secret Ad Auction Manipulation
The Federal Trade Commission and 22 state attorneys general have launched a legal assault against Amazon, alleging the retail giant orchestrated a clandestine surcharge scheme to inflate advertising costs. Regulators claim this systematic manipulation of auction prices has extracted over $20 billion from advertisers, ultimately burdening American consumers with higher retail prices.
At the heart of the dispute is Amazon’s "second price" auction model, which is designed to charge the winner only one cent more than the second-highest bid. The FTC complaint alleges that since 2019, Amazon Ads has been replacing these auction-determined rates with "proxy" prices calculated to maximize corporate profits. Internal communications cited by regulators suggest the company intentionally replaced market-driven results with figures that undermined the cost efficiency of advertising campaigns.
FTC chairman Andrew Ferguson argues that these artificial price hikes were largely passed down to shoppers. Amazon has dismissed the allegations as "misguided," countering that the average winning bid for Sponsored Products search ads actually dropped by 50% between 2019 and 2024. This legal challenge arrives just one year after the company reached a $2.5 billion settlement regarding its Prime subscription practices, signaling a deepening rift between the tech titan and federal regulators.
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