Tuesday, September 1

The Federal Trade Commission (FTC) and 22 states have filed a lawsuit against Amazon, accusing the company of secretly charging businesses more for advertising on its platform. The lawsuit claims Amazon increased prices through its online ad auctions without informing advertisers, affecting over 1 million brands and sellers and generating tens of billions of dollars in additional revenue for Amazon.

The specifics of the alleged scheme involve Amazon's use of a 'soft reserve price' and a 'fake bidder' to push prices higher than true competition would have produced. The FTC claims Amazon made this change to increase advertising revenue, and kept it hidden to avoid advertisers lowering their bids. Amazon generated over $68 billion in advertising revenue last year.

The lawsuit has significant implications for the advertising industry, as it highlights the potential for companies to manipulate pricing systems to increase revenue. The FTC's action may lead to increased scrutiny of online advertising practices and potentially result in changes to the way companies like Amazon operate their ad auctions.