The FTC says Amazon charged advertisers the wrong price 80% of the time
Amazon runs a second-price auction for its search ads, a system in which the winning advertiser is supposed to pay one cent more than the next-highest bid. The Federal Trade Commission now alleges that Amazon charged advertisers their full winning bid roughly 80% of the time instead. The agency and 22 states sued Amazon on […] This story continues at The Next Web
That makes the difference between the auction Amazon describes and the one the FTC says it actually ran particularly important. A second-price auction is not just a label for a particular type of bidding system.
The agency says Amazon “covertly and substantially increased the prices that more than one million brands and sellers were required to pay” and estimates that the practice generated tens of billions of dollars in additional revenue.
A large share of that business comes from sellers that have relatively few alternatives. For a merchant that depends on Amazon for distribution and customer access, refusing to buy sponsored listings can be a difficult choice, which is what turns an argument about auction mechanics into a broader question about market power .
The involvement of 22 state attorneys general could make the financial consequences much larger.
TNW reported in June, citing Bloomberg, that a complaint had already been drafted and that the involvement of the states was the element that could push potential penalties into the billions . That complaint has now been filed.
Amazon is already dealing with other major regulatory cases. The company agreed to pay $2.5 billion to settle deceptive-practices claims over Prime enrolment in autumn 2025, while a separate antitrust case filed in 2023 is scheduled to go to trial in early 2027.
That is less dependent on competing economic theories than a broader argument about market power, and the FTC says it has evidence covering seven years.
The timing is particularly awkward for Amazon because the company is now defending the auction case while preparing for a broader antitrust trial.
Both proceedings touch on the same underlying question about the company’s relationship with sellers: how much freedom do businesses that depend on Amazon really have to walk away from its ecosystem?
