FTC alleges Amazon tripled ad prices for Black Friday and Prime Day

Newly unredacted details from an August lawsuit reveal allegations by the Federal Trade Commission, the US consumer-protection and competition regulator, that Amazon tripled advertising prices for the Black Friday and Prime Day shopping promotions. The FTC also alleges Amazon misled advertisers about the true cause of the increases. These are allegations in a lawsuit.^[1]

The price increases alleged by the FTC directly concern what merchants pay to put products in front of shoppers.^[1] Higher ad prices mean merchants need more sales from each advertising dollar to preserve profit margins; otherwise, they must absorb the cost or reduce advertising.

The FTC's challenge to Amazon's explanations also puts advertisers' ability to assess those costs at issue.^[1] If the allegations are substantiated, Amazon could face pressure to change its pricing practices or disclosures. Implications for other advertising platforms depend on the scope of any subsequent enforcement.

Impact

• Brands and retailers advertising on marketplacesRisk

  Amazon advertisers facing the alleged price increases would need to reassess whether ad-driven sales cover their costs. Merchants with insufficient returns could see lower margins or cut advertising.^[1]

• Retail advertising platformsRisk

  Amazon faces scrutiny of its ad pricing and its explanations to customers. Effects on rival platforms depend on how the case develops; the supplied coverage establishes no industry-wide requirement to change practices.^[1]