FTC Probes Google, Amazon Over Alleged Misleading of Advertisers
Investigations focus on ad pricing transparency as both companies face related antitrust litigation
The Federal Trade Commission has opened probes into Google and Amazon to determine whether the companies misled advertisers about the terms and pricing of ads on their platforms, Bloomberg reported, citing unnamed sources.
Officials in the FTC’s consumer protection unit are seeking information about how ads are priced and sold. For Amazon, investigators have asked about the company’s auction process and whether advertisers were informed about "reserve pricing," the minimum a buyer must pay to secure ad space. For Google, the probe centers on internal ad-pricing practices and whether the company quietly raised advertisers’ costs without adequate disclosure. The agency, Google and Amazon declined to comment, Bloomberg and The Associated Press reported. The FTC is led by Republican Chairman Andrew Ferguson.
The investigations come as both companies confront a broader wave of regulatory and legal challenges over their digital-advertising and marketplace practices. Each company is also defending federal antitrust cases set to go to trial Sept. 22. The FTC is separately pursuing a lawsuit against Amazon alleging it enrolled some customers in its Prime subscription service without clear consent. The Justice Department brought a separate suit against Google alleging the company operates illegal monopolies in the digital advertising sector.
In the Justice Department case, U.S. District Judge Amit Mehta earlier this month found Google had maintained unlawful monopolies in parts of the digital-ad market but declined to adopt the government’s most aggressive remedies. Mehta rejected DOJ recommendations that Google be forced to sell its Chrome browser and be banned from paying billions to secure default search status on many smartphones; instead he ordered greater data sharing with rivals and allowed companies such as Apple to receive payments for default placement so long as agreements are not exclusive. The decision drew criticism from consumer advocates and some antitrust observers, who described it as insufficient to foster competition.
Regulators' renewed scrutiny of ad practices highlights the central role digital advertising plays in the business models of major technology companies. Advertisers rely on detailed information about auction mechanics, bid floors and pricing algorithms to plan campaigns and budgets. The FTC’s consumer protection unit has authority to examine whether companies have been transparent in their communications with advertisers and to pursue enforcement when it finds deceptive or unfair practices.
How quickly the FTC probes will progress or whether they will result in enforcement actions is unclear. The agency has in recent years expanded investigations into platforms’ marketplace practices as it coordinates civil enforcement with other federal antitrust litigation. Any enforcement steps could coincide with or be informed by evidence developed in ongoing DOJ and FTC antitrust suits.
The probes mark another layer of legal pressure for Google and Amazon as both companies continue to defend a range of federal and state investigations and lawsuits over competition, consumer practices and advertising. Further details about the FTC’s requests for documents or testimony were not disclosed in the public reports.
The companies and the FTC did not provide additional comment when contacted by reporters. The outcome and scope of the investigations may become clearer as the antitrust cases proceed toward trial and as the agency decides whether to pursue formal charges or remedies.