E659: FTC Accuses Amazon of Billion Dollar Ad Scheme Since 2019

The FTC and 22 states have filed a lawsuit against Amazon, alleging a multi-year scheme to inflate advertising costs for over one million sellers. Amazon purportedly represented its ad platform as a second-price auction, where winners pay only one cent more than the next highest bidder, while actually operating a first-price auction nearly 80% of the time. Internal documents suggest executives knowingly implemented an undisclosed "soft reserve price" and utilized "invented auction participants" to artificially drive up keyword bids. This practice, which intensified during high-volume events like Prime Day, effectively extracted billions of dollars from sellers. Because Amazon maintains a near-monopoly in e-commerce, sellers face limited alternatives, leaving them vulnerable to these deceptive fee structures and opaque bidding practices that prioritize corporate revenue targets over fair market competition.