Reserve Judgment: The FTC Takes on Amazon’s Ad Auctions
The price to beat in Amazon’s advertising auctions may not have come from another advertiser at all, according to a lawsuit filed Aug. 31 by the Federal Trade Commission (FTC). In the complaint, the FTC alleges that Amazon quietly set the price itself, promising one pricing rule and using another.
That allegation could support a conventional deception claim. If Amazon promised advertisers a genuine generalized second-price auction while deliberately concealing a material departure from that model, the FTC may have a viable case.
But the complaint tries to make a broader leap, arguing that Amazon’s pricing practices necessarily harmed retail consumers. The use of reserve prices, relevance scores, or dynamic pricing does not automatically make an auction unfair. Nor does it necessarily harm the consumers who buy the advertised products.
That is the complaint’s weaker theory. Based on the public record, the FTC has asserted retail-consumer harm with confidence but has yet to prove it.