FTC sues Amazon over alleged advertising price inflation
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The Federal Trade Commission filed a lawsuit accusing Amazon of misleading advertisers by inflating prices in its online ad auctions, potentially extracting billions in excess fees.
The Federal Trade Commission has filed a lawsuit against Amazon, alleging that the e-commerce company misled advertisers by inflating prices in its online search advertising auctions. The complaint, filed in the U.S. District Court for the Western District of Washington and joined by 22 state attorneys general, says Amazon told advertisers it used a “second-price” auction model, where the winner pays only a cent more than the next highest bid, but in practice charged advertisers their own winning bid about 80% of the time. The FTC estimates the practice could have generated tens of billions of dollars in additional revenue for Amazon. > "When one of the world’s largest online retailers engages in unfair and deceptive conduct, the impact can be staggering," FTC Chair Andrew Ferguson said in a statement, adding that higher advertising costs are ultimately passed on to American consumers. Amazon has not yet responded to the complaint.