The Federal Trade Commission (FTC) has launched an investigation into Amazon and Google, examining whether the tech giants misled advertisers regarding the pricing and terms of their ad services. A source familiar with the matter revealed the investigation on Friday, confirming that the FTC’s consumer protection unit is scrutinizing the advertising practices of both companies. The probe aims to determine if Amazon and Google adequately disclosed all relevant information concerning ad costs and contractual obligations to their advertising clients.
The FTC’s inquiry into Amazon centers on its advertising auctions and the disclosure of “reserve pricing” for certain search ads. Reserve pricing sets a minimum bid that advertisers must meet for their ads to be eligible to run. The investigation will determine whether Amazon transparently communicated this practice to its advertising partners. Simultaneously, the agency is examining Google’s internal pricing mechanisms, specifically whether the company increased ad costs without adequately informing advertisers.
Neither company immediately responded to requests for comment regarding the FTC investigation. However, the timing is notable, coinciding with separate, significant antitrust lawsuits against both companies. Amazon is facing an FTC lawsuit in Seattle alleging deceptive enrollment in its Prime subscription service and obstacles to cancellation. Meanwhile, the Department of Justice is pursuing a case against Google in Virginia, aiming to force the sale of its advertising technology tools to address what a judge deemed illegal monopolies. Both of these cases are scheduled to begin trial on September 22nd.
This FTC investigation adds another layer of scrutiny to the already intense legal battles facing Amazon and Google. The FTC’s focus on misleading advertising practices underscores growing concerns about transparency and fairness within the digital advertising ecosystem, particularly regarding the practices of major tech platforms. The outcome of this investigation could have significant implications for the future of online advertising and the regulatory landscape governing these powerful companies. The FTC is also pursuing a separate case against Amazon, alleging illegal monopolies in the online superstore and marketplace sectors.
