US FTC Investigating Google and Amazon Over Search Advertising Practices, Source Says

The US Federal Trade Commission (FTC) is investigating whether Amazon.com (AMZN.O) and Alphabet (GOOGL.O) misled advertisers on their platforms, a source familiar with the matter told Reuters on Friday.

The inquiry, being conducted by the FTC’s consumer protection division, is focused on whether Amazon and Alphabet have provided clear and accurate disclosures about the terms and pricing of ads on their websites.

Alphabet did not immediately respond to a request for comment, while Amazon declined to comment.

According to the source, the FTC is seeking details from Amazon regarding its ad auction processes and whether it properly disclosed “reserve pricing” for certain search ads. Reserve pricing refers to the minimum price advertisers must accept before being allowed to purchase an ad slot.

The source also said the agency is reviewing Google’s internal pricing procedures, including whether it increased advertising costs through methods not disclosed to advertisers.

Bloomberg News was the first to report the development.

Both Google and Amazon are already facing separate lawsuits filed by federal agencies this month.

The FTC has filed a case in Seattle against Amazon, accusing the company of enrolling users in its Prime service without their consent and making it difficult to cancel.

Meanwhile, the US Department of Justice is trying to force Google to sell its ad tech tools as part of a settlement after a Virginia judge found the company guilty of maintaining an illegal monopoly.

Hearings for both cases are scheduled for September 22. Additionally, the FTC is pursuing another case alleging that Amazon holds unlawful monopolies in the online superstore and marketplace sectors.