FTC Launches Major Legal Action Against Amazon for Alleged Ad Overcharges

POLICY WIRE — Washington, USA — The Federal Trade Commission (FTC), alongside a coalition of 22 states, has initiated a significant lawsuit against Amazon, accusing the e-commerce giant of covertly and systematically overcharging advertisers on its platform. This legal action, filed in a Washington federal court, claims that Amazon’s practices have resulted in over $20 billion in revenue over a seven-year span.

The lawsuit alleges that Amazon manipulated the minimum price advertisers were required to pay for ad space on its website. Specifically, the complaint focuses on Amazon’s auction prices for three advertising spaces: Sponsored Products, Sponsored Brands, and Sponsored Display.

FTC Chairman Andrew Ferguson stated that Amazon misled millions of advertising customers into paying significantly higher prices, with these increased costs largely being passed on to American consumers. This marks the third major legal action the FTC has taken against Amazon, following previous lawsuits for deceptive Prime enrollment practices and monopolistic operations.

Amazon has refuted the FTC’s allegations, describing the lawsuit as “misguided” and claiming that the agency “fundamentally misunderstands how advertisers operate.” The company asserts that advertisers save money by adjusting bids based on real-world performance rather than auction mechanics.

Despite Amazon’s defense, the FTC has been increasingly active in regulating online advertising giants. Last year, the FTC investigated and filed a complaint against Google for its search advertising practices.

Reporting by Policy-Wire (PW)