THE WHAT? Amazon has been sued by the US Federal Trade Commission and 22 state attorneys general over allegations that it manipulated its advertising auctions and overcharged advertisers by more than US$20 billion since 2019.
THE DETAILS The lawsuit alleges that Amazon misled approximately 1.2 million advertisers, including more than 500,000 small and medium-sized businesses, about the pricing of Sponsored Products, Sponsored Brands and Sponsored Display ads. Regulators claim Amazon altered its auction system to increase advertising prices rather than allowing them to be determined through a competitive bidding process. Amazon denies the allegations, arguing that its auction model has been properly disclosed and saved advertisers US$8 billion over the five years to 2025. The case targets a major growth business for Amazon, whose advertising revenue reached US$68.6 billion last year.
THE WHY? The lawsuit raises significant questions over the cost and transparency of one of the world’s most important digital retail advertising platforms, with potential implications for beauty brands and other businesses that rely on Amazon sponsored listings for product visibility, customer acquisition and e-commerce growth.
Source: Bloomberg
