The Amazon-FTC case exposes how opaque ad auctions really are

The U.S. Federal Trade Commission's suit against Amazon's on-platform search advertising has drawn a shrug from agency buyers, and that reaction is itself the story. The FTC alleges Amazon quietly moved away from the second-price auction format and introduced a "soft reserve" price, an artificial floor that nudged winning advertisers closer to their maximum bids while Amazon continued to present the system as second-price. One agency executive told Digiday that "70% of the time there isn't data passed on the auction type" even from independent demand-side platforms, and another noted that "we've been living with this already" in programmatic display. The soft reserve mechanic, in Amazon's own description, never makes an advertiser pay more than their bid, but it functionally behaves like a first-price auction. Amazon calls the suit "misguided" and says inflation-adjusted Sponsored Products costs stayed broadly flat from 2019 to 2024.

The crux

The FTC's complaint is less a single platform's transgression than a confirmation that opaque, first-price-leaning auctions are now the default across retail media and programmatic, and advertisers have stopped being shocked by it.

Sell-side read

This is direct evidence that log-level transparency on auction mechanics is eroding, which strengthens a publisher's hand if it can offer clean, disclosed auction formats as a differentiation point to nervous buyers.

Watch

whether the suit pressures retail media networks to publish auction-type data in bid responses, and whether any SSP leans into "disclosed auction mechanics" as a sales wedge.