The Federal Trade Commission (FTC) and 22 state attorneys generals are suing Amazon alleging the company secretly overcharged advertisers in its search ad auctions for more than seven years. The suit was filed in the Western District of Washington.
Here’s what happened and why it matters.
What did Amazon allegedly do?
Amazon told advertisers it was running a fair deal. Bid what you’re genuinely willing to pay, and you’ll only ever be charged one cent more than the next highest bidder. That’s called a second-price auction, and it’s the model most of the ad industry has used for years, because it means nobody has to bid cautiously or play games.
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