The Federal Trade Commission and 22 state attorneys general are suing Amazon, accusing the tech giant of overcharging advertisers for over seven years by rigging ad auctions. The multi-billion-dollar case claims Amazon secretly inflates prices for ads, siphoning billions from unwitting customers.

Since 2019, Amazon has used a 'hidden' mechanism to impose surcharges on ads, often unbeknownst to the advertisers. The company claims that competitive auctions set the prices for ads on its platform. However, internal documents reveal that Amazon overrides these auctions to increase its profits.

Amazon’s scheme allegedly overcharged approximately 1.2 million advertisers by illegally extracting over $20 billion. The lawsuit was filed in the US District Court for the Western District of Washington and highlights the extent to which tech giants can manipulate market dynamics.

“Based on numerous internal documents describing its ‘hidden’ ‘surcharges,’ Amazon’s scheme has likely illegally extracted over $20 billion from its unwitting advertising customers,” the lawsuit states. This case could have wide-ranging implications for how online advertising and commerce are regulated.