U.S. states and FTC sue Amazon over alleged manipulation of advertising auctions
Translated from Spanish and summarized by DistantNews. Read the original for the full story.
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- A bipartisan coalition of 21 states and the FTC sued Amazon, alleging that it secretly manipulated advertising auctions and charged customers more than they should have paid.
- Prosecutors said the practices may have extracted more than $20 billion from over 1.2 million advertisers, including small and medium-sized businesses.
- The coalition alleged that Amazon violated federal and state consumer-protection laws, while higher advertising costs may have contributed to higher product prices.
A coalition of state prosecutors and the Federal Trade Commission has accused Amazon of secretly rigging the auctions it uses to set advertising prices on its website.
The lawsuit, brought by 21 states and the FTC, cites internal documents that allegedly describe hidden surcharges. Prosecutors said the system may have taken more than $20 billion from over 1.2 million advertising customers, including small and medium-sized businesses.
Based on numerous internal documents describing its hidden surcharges, it is likely that Amazon's scheme illegally extracted more than $20 billion from its advertising customers, who were unaware of the situation.
Amazon presents its advertising system as an auction. Potential advertisers submit anonymous bids, which are ranked according to their value and relevance. Under that description, the winning advertiser pays one cent more than the next-highest bid.
It is likely that the increase in advertising prices led to an increase in product prices for consumers.
New York Attorney General Letitia James said the investigation found that Amazon began secretly manipulating the auctions in 2018. Prosecutors allege that the company submitted false second-place bids, allowing it to charge advertisers more than the auction required.
The coalition also pointed to higher prices during major shopping periods, including Black Friday and Prime Day. James said the increased advertising costs may have pushed up consumer prices for products. The lawsuit alleges violations of federal and state consumer-protection rules, including prohibitions on unfair or deceptive business practices and false advertising.
Amazon began secretly manipulating these auctions by submitting fake second-place bids to charge advertisers more than they should have paid.
About this summary
Originally published by ABC Color in Spanish. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.
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