FTC sues Amazon over alleged secret manipulation of advertiser minimum prices

The Federal Trade Commission filed a lawsuit against Amazon on August 31, accusing the company of secretly manipulating the minimum prices that merchants must pay to advertise on its platform. According to the FTC and more than 20 state attorneys general joining the case, Amazon allegedly deployed an internal tool starting around 2018 to push up advertising auction prices without disclosing the practice to advertisers, generating tens of billions of dollars over roughly seven years. The lawsuit marks the third major FTC legal action against Amazon, following a $2.5 billion settlement last year involving Prime membership cancellation practices and a pending separate monopoly case scheduled for jury trial next year.

1. The FTC alleges Amazon adjusted its ad auction system around 2018, inserting a 'soft reserve' to raise minimum prices without merchant disclosure.
2. Amazon allegedly used the practice in roughly 7 or 8 of every 10 ad auctions in recent years.
3. On peak shopping days, per-click ad costs climbed by as much as 50 percent due to the alleged manipulation.
4. More than 20 state attorneys general are expected to join the lawsuit in federal court in Seattle.
5. The FTC accused Amazon of generating over 20 billion dollars illegally from the practice.
6. This follows Amazon's 2.5 billion dollar settlement last year over deceptive Prime sign-up and cancellation practices.
7. Amazon's shares declined 2.7 to 2.9 percent following news of the lawsuit on August 31.