FTC alleges Amazon illegally made $20 billion by rigging billions of ad auctions
The Federal Trade Commission and 22 states have sued Amazon, alleging that the company has secretly overcharged advertisers for seven years by manipulating ad auctions. The lawsuit claims that Amazon has extracted over $20 billion from its advertising customers through this scheme.
The FTC alleges that Amazon has been using a system called 'soft reserve prices' to inflate ad prices, which is not disclosed to advertisers. The company has also been using a 'proxy 2nd price' to set prices, rather than allowing the auction to determine the price. The FTC has obtained internal documents and messages that reveal the extent of Amazon's scheme.
The lawsuit has significant implications for the tech industry, as it suggests that Amazon has been abusing its dominant position in the market to extract more revenue from advertisers. The FTC is seeking a permanent injunction to change Amazon's practices, as well as civil penalties, restitution, and disgorgement. The case also raises questions about the transparency and fairness of online advertising.
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