Amazon rigged billions in ad pricing, lawsuit from states and US watchdog alleges

A lawsuit filed by the US Federal Trade Commission and 22 states alleges that Amazon secretly overcharged over a million advertising customers by manipulating online auctions used to set ad prices. The alleged scheme, which has likely generated $20bn for the company since 2019, involves Amazon overriding actual auction results and replacing them with higher prices set by Amazon to boost profits.

According to the complaint filed in Washington, Amazon's alleged methods target a type of auction called "second price auctions," where advertisers expect to pay one cent more than the next highest bidder for each bid won. However, the lawsuit claims that Amazon charges advertisers their own winning bid 80% of the time, resulting in lower prices for the company.

Amazon denies the allegations, stating it strongly disagrees with the premise that it misled advertisers and calls the lawsuit misguided. The FTC and consumer watchdog accuse Amazon of seeking to increase its profits by exploiting the auction system.