North Carolina joins lawsuit accusing Amazon of manipulating advertising auctions
RALEIGH — North Carolina Attorney General Jeff Jackson has joined the Federal Trade Commission and attorneys general from 21 other states in a lawsuit accusing Amazon of manipulating advertising auctions and overcharging businesses by more than $20 billion since 2019.
The lawsuit alleges the conduct affected more than 1.2 million advertisers, including more than 500,000 small- and medium-sized businesses.
Amazon has denied the allegations and described the case as misguided.
According to the complaint, Amazon represented that advertisements on its platform were sold through second-price auctions. Under that system, the winning advertiser pays slightly more than the second-highest bid rather than the full value of its own bid.
The lawsuit alleges Amazon began manipulating those auctions in 2019 by inserting a higher bid generated by the company after identifying the winning and second-highest bids. That substituted bid allegedly allowed Amazon to charge winning advertisers more than would have been required under the stated auction process.
The complaint also alleges Amazon tested how much it could increase charges without causing advertisers to reduce their bids or spending. According to the North Carolina Department of Justice, the company introduced some increases gradually after abrupt changes generated complaints.
The allegations have not been adjudicated.
Jackson said higher advertising costs may ultimately affect consumers because sellers can incorporate those expenses into prices charged for groceries, clothing, pharmacy products, school supplies and other goods.
“Amazon secretly rigged its bidding system to charge businesses more, and customers paid the price,” Jackson said in announcing the lawsuit.
Amazon generates more than $68 billion in advertising revenue, according to figures cited by the state.
The lawsuit asks the court to prohibit the challenged practices, impose penalties and require Amazon to refund excess payments allegedly collected from advertisers.
North Carolina joined the FTC and attorneys general from Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington.
The requested penalties, refunds and restrictions remain subject to court review. Amazon will have an opportunity to contest the allegations during the legal proceedings.
Editor’s note:
This article was drafted with the assistance of artificial intelligence and was reviewed and fact-checked by a member of the NC Political News editorial team before publication.
