The Federal Trade Commission has launched an investigation into the advertising practices of tech titans Amazon and Google. The probe, initiated by the agency’s consumer protection unit, is examining whether the companies misled advertisers about the pricing and terms governing their ad sales, which are conducted through rapid, automated auctions.
At the heart of the inquiry is the auction process itself. Google sells ad space in the blink of an eye, initiating an automated auction the moment a user enters a search query. Similarly, Amazon uses real-time auctions to place the sponsored product listings that appear throughout its marketplace.
The FTC is scrutinizing whether Amazon properly disclosed its use of reserve pricing. This practice involves setting a secret minimum price, or price floor, that advertisers must meet to have a chance at winning an ad slot, a critical detail that could significantly impact an advertiser’s bidding strategy and costs.
For Google, the investigation is looking into the company’s internal pricing mechanisms. Regulators are questioning if the search giant was covertly increasing the cost of advertisements through its processes in ways that were not transparent or disclosed to the advertisers who ultimately pay the bills.
This is not the first time these companies have faced intense federal scrutiny over their advertising dominance. Earlier this year, a federal judge ruled that Google unlawfully maintained a monopoly in the online advertising technology market following a lawsuit from the Department of Justice that sought to break up its ad business. Google did, however, recently avoid major penalties in a separate DOJ monopoly case concerning its Chrome browser.
FTC Chair Andrew Ferguson has consistently stated that regulating big tech is a top priority for the agency. This latest investigation moves forward as the leaders of these same tech companies are actively seeking to build relationships with President Trump through high-profile gestures, including extravagant personal gifts and sweeping promises of massive investment within the United States.
