Attorney General Bonta Sues Amazon for Deceptive Digital Advertising Sales

Lawsuit alleges Amazon illegally overcharges businesses that use its platform to advertise their products

OAKLAND — California Attorney General Rob Bonta today joined the Federal Trade Commission (FTC) and a bipartisan coalition of 22 attorneys general in challenging deceptive conduct by Amazon.com, Inc. (Amazon) related to auction sales of digital advertising on its platform. The lawsuit, filed in the U.S. District Court for the Western District of Washington, alleges Amazon acted in violation of California’s Unfair Competition and False Advertising Laws when it illegally overcharged businesses that use its platform to advertise their products. Amazon obtained over $20 billion in undisclosed surcharges from its unsuspecting advertising customers. In today's complaint, the attorneys general and the FTC ask the court to end Amazon's deceptive digital advertising practices and for remedies, including injunctive relief, civil penalties, disgorgement of ill-gotten profits, and restitution.

“For years, Amazon has misrepresented how it calculates the cost of advertising on its platform,” said Attorney General Bonta. “Over the years, Amazon has rigged billions of ad auctions, inflating Amazon’s profits at the expense of Americans who rely on Amazon’s advertising to generate business. I’m proud to stand alongside the FTC and my colleagues across the nation in protecting our small and medium-sized businesses from being taken advantage of by this multi-trillion-dollar company.”  

In addition to operating the world’s largest e-commerce platform, Amazon generates more than $68 billion of annual advertising revenue, primarily by selling advertising space on its e-commerce website and app. More than one million advertisers purchase advertising on Amazon’s platform through auctions.  

As detailed in the complaint, Amazon has represented to customers that advertise on its website that its advertising prices are set by “second price” auctions that rank participants by a combination of their bid and relevance to shoppers’ searches, and where the winning advertiser only pays the minimum amount necessary (e.g., one cent more) to beat the second-place bid. However, the complaint alleges that, in 2019, Amazon started to add surcharges on top of the second-place bid set by the auctions and thereby drove up the final price paid by the winning bidder and did not disclose this change to its digital advertising customers.  

The complaint further alleges that Amazon’s use of surcharges was intended to extract more revenue from advertising customers, who ended up paying more for the same advertising placement. The lawsuit illustrates that time and time again, Amazon made false or misleading statements to its advertising customers about how prices were determined in its auctions and those customers were unable to discover the truth about the surcharges because Amazon controlled and limited the auction data available to customers.

The lawsuit today alleges that Amazon continues to use deceptive surcharges in its digital advertising auction sales to this day.

In filing this lawsuit, Attorney General Bonta joins the FTC and the attorneys general of Alaska, Arizona, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont, and Washington.