The Federal Trade Commission (FTC) is conducting an investigation into Amazon and Alphabet’s Google for allegedly misleading advertisers about what the true costs are to put advertisements on their platforms. This investigation is another layer of scrutiny on the two companies, who already monopolize the digital advertising space, and are facing total separation.
The Core of the Investigation
According to reports, the FTC’s consumer protection unit is reviewing whether Amazon and Google provided advertisers with clear and accurate disclosures about how their ad pricing systems work.
- For Amazon, regulators are examining whether its ad auctions adequately disclosed the use of “reserve pricing” price floors that advertisers must meet to secure ad placements. Critics argue that failing to explain these mechanisms could leave advertisers paying more than expected.
- For Google, the FTC is focused on whether the company properly informed advertisers of price increases or internal adjustments in its search ad system. Given Google’s dominance in digital search advertising, even small changes could have significant financial consequences for businesses.
Political Backdrop
The scrutiny comes at a time when many tech companies have found some relief in President Donald Trump’s second term. Tech CEOs have stepped up their presence in Washington, including attending a recent State Dining Room dinner at the White House, in efforts to cultivate goodwill, ease federal investigations, and avoid new tariffs.
Despite this outreach, the FTC’s move shows regulators remain cautious about Big Tech’s power in shaping markets, particularly in digital advertising where transparency has long been a sticking point.
Why This Matters
Digital advertising is a cornerstone of both companies’ revenue. In 2024, Google generated more than $175 billion in ad sales, while Amazon’s ad business exceeded $46 billion. With so much money at stake, advertisers have pressed for greater visibility into how auction rules and pricing models are set.
The investigation raises important questions: Are advertisers being charged fairly? Are the rules of the ad auctions transparent? And are hidden pricing mechanisms reinforcing Big Tech’s dominance in ways that harm smaller businesses and consumers?
Broader Regulatory Context
This is not the first time regulators have questioned Google and Amazon’s practices. They are both under antitrust lawsuits and international investigations into how they run their platforms. By focusing on price transparency in their ad auctions, the FTC is signaling that consumer protection and advertiser rights are part of the evolving strategy for its oversight of these big businesses.
What Happens Next
Neither Google or Amazon have made comments that were public, and the FTC has not provided a schedule for its review, leaving advertisers to wonder what is next. Possible results include:
- Changes in required reporting requirements regarding ad auctions.
- Monetary penalties if regulators find that advertisers were taken advantage of.
- Increased scrutiny over (digital) ad systems run by the giants.
The FTC investigation into Google and Amazon for ad pricing practices indicates the growing tension between Big Tech’s dominance, and regulators’ desire for accountability and transparency. Big Tech and both companies want to remain in control in Washington, but this investigation is indicative of a much broader truth: the future of advertising could be influenced as much by regulatory oversight as by technology.hlights a broader truth: the future of digital advertising may be shaped as much by regulatory intervention as by technological innovation.
For advertisers, the outcome could redefine how they budget, strategize, and compete in an online market dominated by two of the world’s most powerful tech companies.
