1. Website Planet
  2. >
  3. News
  4. >
  5. Lawsuit: Amazon Allegedly Allowed “Defect” Ads
Lawsuit: Amazon Allegedly Allowed “Defect” Ads

Lawsuit: Amazon Allegedly Allowed “Defect” Ads

Ivana Shteriova
According to the Federal Trade Commission’s (FTC) antitrust lawsuit filed against Amazon in September, Amazon founder Jeff Bezos instructed executives to welcome more junk ads to increase ad revenue.

This practice has also made it hard for shoppers to find what they’re looking for and pushed them toward more expensive products, the FTC claims.

Portions of the FTC lawsuit made public state that “Amazon has increased not only the number of advertisements it shows, but also the number of irrelevant junk ads, internally called ‘defects.’ Mr. Bezos instructed his executives to accept more defects because Amazon can extract billions of dollars through increased advertising despite worsening its services for customers.”

The case against Amazon also covers other allegedly problematic practices that have helped the e-commerce giant gain profits or an advantage over the competition, with its price-matching algorithms being the main point of contention. FTC claims that Amazon’s algorithms, like “Project Nessie,” brought the e-commerce giant “$1 billion in excess profit” and helped it acquire market dominance unfairly.

Other portions of the suit accuse Amazon of imposing strict standards on its sellers, making it difficult for them to sell on other platforms. Furthermore, regulators say Amazon discourages sellers from taking care of their own shipping and logistics even when they can match Amazon’s Prime speed. This is because “Amazon executives worried” that sellers would drive business to competitors, which will ultimately have a negative effect on Amazon’s shipping revenue.

Lately, Amazon’s business practices have been under heavy scrutiny. The UK’s Competition and Marketing Authority (CMA) has opened an investigation into the UK cloud computing industry to determine whether competition in this market is fair. The investigation targets Amazon Web Services (AWS) due to its large market share in the UK.

A study from Marketplace Pulse earlier this year revealed that the cost of selling on Amazon is at an all-time high, going from a 35% final cut in 2016 to 50% in 2022. The costs are rising because Amazon has “increased fulfillment fees,” and “spending on advertising [is becoming] unavoidable.”

Amazon described the FTC’s claims as “grossly misleading and taken out of context,” adding that they don’t reflect “Amazon’s long-standing dedication to continually improving the customer experience.”

Rate this Article
4.5 Voted by 2 users
You already voted! Undo
This field is required Maximal length of comment is equal 80000 chars Minimal length of comment is equal 10 chars
Any comments?
Reply
View %s replies
View %s reply
More news
Show more
We check all user comments within 48 hours to make sure they are from real people like you. We're glad you found this article useful - we would appreciate it if you let more people know about it.
Popup final window
Share this blog post with friends and co-workers right now:

We check all comments within 48 hours to make sure they're from real users like you. In the meantime, you can share your comment with others to let more people know what you think.

Once a month you will receive interesting, insightful tips, tricks, and advice to improve your website performance and reach your digital marketing goals!

So happy you liked it!

Share it with your friends!

1 < 1 1

Or review us on 1

3205728
50
5000
74306105