Amazon, Google Probed by FTC Over Search Advertising Practices

The US Federal Trade Commission is investigating whether Amazon.com Inc. and Alphabet Inc.’s Google misled advertisers that place ads on their websites, according to people familiar with the matter.

The investigations, which are being conducted by the agency’s consumer protection unit, focus on whether the companies properly disclosed the terms and pricing for ads, said the people, who asked not to be named discussing a confidential matter.

The FTC probes mark a new front in regulatory scrutiny of Google and Amazon even as top technology firms’ executives try to win over President Donald Trump. Judges overseeing two Justice Department cases against Google have already found the company has illegal monopolies in online search and some search advertising as well as over technology used to buy and sell ads online.

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Real-Time Auctions

Google sells search ads via automated auctions that take place in less than a second after a user enters a query. Amazon also hosts real-time auctions that place ads within its listings, sometimes known as “sponsored listings” or “sponsored ads” that users see when they search for specific products.

The FTC is seeking details about Amazon’s auctions and whether it disclosed “reserve pricing” for some search ads — price floors that advertisers must meet before they can buy an ad, the people said. Separately, the FTC is examining practices by Google, including its internal pricing process and whether it increased the cost of ads in ways that weren’t disclosed to advertisers, the people said.

The investigations are ongoing, the people said, and show that scrutiny of some of the US’s largest companies continues under the Trump administration. Trump’s FTC Chair Andrew Ferguson has said scrutiny of the technology sector is his highest prority.

Read More: Trump’s FTC Chairman Is Becoming the MAGA Answer to Lina Khan.

The FTC and Google declined to comment. Amazon didn’t respond to requests for comment.

Online Advertising

Digital advertising has gradually overtaken offline advertising as companies with vast troves of consumer data say that online ads can target those interested in making purchases. Google remains the market leader, while Amazon is the third-largest online advertising company.

Scrutiny of the industry dates back to the first Trump administration, when the Justice Department and a group of state attorneys general opened investigations into Google. As part of its search case, the Justice Department argued that Google has been able to raise prices without pushback. During a 2023 trial, Google executives acknowledged that the company sometimes tweaked its advertising auctions to ensure the company met revenue targets, often without disclosing any changes to advertisers.

In 2020, the company changed what information it shares with advertisers about where their ads appear, which antitrust enforcers alleged harmed advertisers by making it harder for them to know what keywords they bought and which ones were useful.

Meanwhile, a group of states led by Texas Attorney General Ken Paxton separately sued Google for anticompetitive and deceptive practices in its ad business.

The FTC has been looking into many aspects of Amazon’s business since at least 2019. A trial on whether the company made it too difficult for consumers to cancel the retailer’s Prime subscription program is set to begin later this month in Seattle federal court. A second trial focused on antitrust allegations the company has monopolized online marketplace services is currently scheduled for an early 2027 trial before the same judge.

Advertising has become a lucrative and fast-growing line of business for the Seattle e-retailer, bringing in $56 billion in revenue last year, according to a company filing. That number includes search advertising — the sponsored listings that appear within Amazon’s marketplace — as well as video ads and online display advertising shown around the web.

According to one of the people, the FTC’s latest investigation emerged from its earlier antitrust case. In that complaint, the agency alleges that Amazon litters its marketplace with irrelevant results for search queries, making it harder for shoppers to find what they are looking for and more expensive for sellers to use the platform. The practice effectively forces sellers to buy ads to make their product appear in response to consumer searches.

--With assistance from Matt Day, Spencer Soper and Davey Alba.

To contact the reporters on this story:
Josh Sisco in San Francisco at jsisco6@bloomberg.net;
Leah Nylen in Washington at lnylen2@bloomberg.net

To contact the editors responsible for this story:
Sara Forden at sforden@bloomberg.net

Dana Wollman

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