TL;DRThe FTC and 22 states sued Amazon on 31 August over its Sponsored Ads auctions, alleging more than $20bn in additional advertising costs since 2019. Amazon published a detailed rebuttal the same day, answering a disclosure claim with outcome data. Its strongest defence concedes that reserve prices are not predictable in advance by anyone, including Amazon, which is a striking thing to say about a $68.6bn advertising business.
The Federal Trade Commission and 22 states sued Amazon in Seattle on 31 August, alleging it inflated auction prices for Sponsored Products, Sponsored Brands and Sponsored Display, and generated more than $20bn in additional advertising costs since 2019. As CNBC reported, regulators say 1.2 million advertisers were affected, including more than 500,000 small and medium businesses.
Amazon published a detailed rebuttal the same day, calling the lawsuit misguided and saying it will make its case in court. The document is worth reading closely, because the two sides are not arguing about the same thing.
What each side is actually claiming
The FTC’s case is about disclosure. It alleges Amazon described one set of auction rules to advertisers while operating another, and that winners were charged their full bid rather than the second-price amount around 80% of the time.
