The Federal Trade Commission has published newly unredacted details from its lawsuit accusing Amazon of secretly inflating advertising prices, Digiday reports. According to the FTC, Amazon imposed surcharges of up to 50% on ordinary shopping days and 250% during major retail events, generating an additional $87 million during the 2022 holiday season.
The FTC and 22 state attorneys general accuse Amazon of misleading advertisers about its Sponsored Products auctions. Amazon presented them as generalized second-price auctions, but regulators allege it added undisclosed reserve prices that raised charges without matching competition. The complaint alleges average cost per click rose 20% in the 2021 holiday season, with some advertisers seeing increases above 200%, and that executives considered reserve prices to address a $40 million revenue shortfall. Amazon maintains that reserve prices reflect the value of its placements, disputes the FTC's interpretation and argues reserve pricing is not inherently unlawful. The case is ongoing.
The allegations land as Amazon pushes automation. At October's unBoxed conference it unveiled Ads Agent and Full-Funnel Campaigns, where advertisers set objectives, products, creative and budgets and Amazon handles targeting, allocation and optimization. Amazon says beta tests delivered up to 67% higher return on long-term ad spend and 29% lower cost per new-to-brand customer than manual campaigns. Digiday notes the FTC case concerns Sponsored Products, not the new AI tools, but says it adds weight to concerns about advertisers' ability to verify automated decisions and fees.