Amazon faces US lawsuit over alleged manipulation of advertising prices

Yesterday 10:00

By: Azzat Manal

Amazon faces US lawsuit over alleged manipulation of advertising prices

The U.S. Federal Trade Commission (FTC), joined by attorneys general from 22 states, has filed a lawsuit against Amazon, accusing the e-commerce giant of secretly increasing the prices businesses pay for advertising on its platform.

According to the complaint, Amazon allegedly altered its advertising auction system for more than seven years, charging winning bidders significantly more than the pricing rules publicly presented by the company. The regulator claims that these practices allowed Amazon to increase advertising revenue while shifting higher costs onto businesses and, ultimately, consumers.

Amazon sells advertising space alongside product search results through an auction-based system. Under the pricing mechanism described by the company, the winning advertiser is generally expected to pay only slightly more than the second-highest bid. For example, if one company bids $200 and another offers $190, the winning advertiser would normally pay $190.01.

The FTC alleges, however, that Amazon charged the full winning bid in roughly four out of five product advertising auctions. The agency says internal company documents contain references to additional charges that were not transparently disclosed to advertisers.

The lawsuit also accuses Amazon of using practices that allegedly distorted the auction process, including the use of bids that were not genuine. Regulators argue that these methods enabled the company to raise advertising prices while maintaining the appearance of a competitive bidding system.

FTC Chairman Andrew Ferguson said the alleged conduct could have broad consequences because of Amazon's dominant position in online retail and digital advertising. The agency argues that higher advertising expenses can eventually be reflected in the prices paid by consumers.

The allegations come as digital advertising has become an increasingly important source of revenue for major technology companies. Amazon has expanded its advertising business substantially in recent years, competing with established players such as Google and Meta for spending from brands seeking to reach online shoppers.

Following news of the lawsuit, Amazon shares fell by approximately 2.5 percent on Monday. The legal proceedings could put additional pressure on the company as regulators in the United States continue to examine the business practices of major technology platforms.

The case is expected to face a lengthy legal process, and the allegations have yet to be proven in court. The dispute could nevertheless have significant implications for the future of online advertising auctions and the transparency of pricing systems used by large digital platforms.