Amazon Caught Stealing Authors' Ad Dollars

So the big news is the FTC and 22 states are suing Amazon for overcharging advertisers.

Which means if you have advertised on Amazon...

This probably affects you.

Jonathan?

You might get $14 in some kind of settlement.

According to the Federal Trade Commission press release dated August 31st, the FTC and 22 state attorneys general sued Amazon in Seattle federal court over the way that sponsored products, sponsored brands, and display ads set their prices.

The 181-page complaint says that that system pulled more than $20 billion out of about 1.2 million advertisers, including more than 500,000 small and medium businesses.

Now, what happened?

That's us.

That's

me.

That's you.

You're a business.

You need to think of yourself as a business.

I bought Amazon ads to promote my book.

I'm a small business.

I am one of these 500,000 people.

I am one of the 99%.

So what happened was that Amazon has been telling us for years that a winning click in their auction process just costs one cent more than the next bid.

So if you bid a dollar and the guy behind you bid 98 cents, you're only paying 99 cents.

That's what your winning bid is.

That is a generalized second price auction, which is the pitch that we heard in help pages and training videos every guru online ever has taught this very thing.

This complaint says that Amazon added an undisclosed soft reserve price in 2019, which is a number that Amazon staff called a proxy second price and an invented auction participant price.

Now, what that might do is drive the price up more because now you're bidding a cent more than this invented auction participant.

Shenanigans.