Nebraska Attorney General Mike Hilgers has joined a coalition of 22 states and the Federal Trade Commission in suing Amazon over allegations the company secretly inflated prices in its online advertising auctions.
The lawsuit claims Amazon increased advertising costs for more than one million brands and sellers over a period of more than seven years, extracting tens of billions of dollars from advertising customers. The FTC and state attorneys general allege Amazon imposed undisclosed surcharges on advertisers, including more than 500,000 small and medium-sized businesses.
According to the complaint, Amazon told advertisers its auctions were “second price” auctions, meaning the winning advertiser would pay only slightly more than the next-highest bid. But the lawsuit alleges Amazon routinely charged advertisers their full winning bids, effectively turning the auctions into first-price auctions.
The complaint says Amazon began adding hidden surcharges in 2019, particularly increasing advertising costs during major shopping events such as Prime Day and Black Friday. The lawsuit also alleges Amazon executives knew about the pricing changes and that company leaders provided misleading answers when advertisers questioned changes to the auction system.
By 2024, the complaint alleges advertisers were paying their full bids about 80 percent of the time.