FTC Sues Amazon, Accusing the E-Commerce Giant of Misleading Advertisers
The FTC and 22 state attorneys general are suing Amazon, accusing the company of secretly inflating advertising prices through undisclosed changes to its auction system that may have extracted more than $20 billion from advertisers since 2019. "Amazon has millions of advertising customers who were misled into paying significantly higher prices," FTC Chairman Andrew Ferguson said in a statement. "These higher costs were largely passed on to American consumers." CNBC reports: The complaint, which was filed in U.S. District Court for the Western District of Washington, centers on Amazon's sponsored products ads, brands ads and display ads that run alongside search results on its sprawling webstore. Amazon has amassed the third-largest digital advertising business globally, trailing only Google and Meta. The company hauled in more than $68 billion in ads revenue last year, with the lion's share coming from sales of sponsored products ads. Third-party sellers who hawk their wares on Amazon's marketplace have recently criticized surging advertising costs on the site, including a string of recent policy changes, which led to some top merchants withholding their ad spend in a boycott. The company has traditionally used a "second-price" auction system, wherein it told advertisers they "only pay the least bid amount needed in order to win," the complaint states, citing Amazon's own marketing materials.
The FTC alleges in its complaint that Amazon in 2019 changed its auction rules without notice by adding an undisclosed surcharge it referred to as a "soft reserve price," which led to higher ad prices. "Amazon made this surreptitious change to its auction because it was unhappy about how much revenue its advertising auctions were generating," the agency said in its complaint, which cites internal communications between Amazon ad executives. In one exchange, a company executive allegedly acknowledged it uses an "invented auction participant" to increase prices, the FTC said. The FTC and the states alleged Amazon's practices violate federal and state consumer protection laws, and they're seeking civil penalties, restitution and other unspecified damages. In a blog post, Amazon called the FTC's lawsuit "misguided" and said the complaint "fundamentally misunderstands how advertisers operate." The company added that the agency's lawsuit doesn't include evidence of consumer price increases.
"We've provided advertisers with guidance about our auctions and pricing in the main tools they use to manage their campaigns, and we continue to update that guidance," the company said. "We look forward to making our case in court."
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According to The Information (paywalled), Apple reportedly moved up the release of new Mac mini and Mac Studio models after unexpectedly strong enterprise demand for Macs capable of running AI workloads. MacRumors reports: Apple normally releases new Mac models in the autumn, closer to October or November, making this week's announcement unusually early, falling just before the anticipated arrival of new iPhone models. The Information says that the AI-driven boom in Mac Studio and Mac mini sales is behind the early launch. Apple noticeably promoted the ability to link multiple Mac Studios together into a single, more capable system for running large frontier AI models, a feature aimed at business and developer customers rather than everyday consumers.
Apple highlighted the Mac mini and Mac Studio's shift toward business buyers in June, with a "Business at the Park" event involving executives from major companies Ford, Disney, and Anthropic. The Mac mini was said to be the "darling" of the event. Even so, enterprise's rush toward powerful desktop Macs more broadly took Apple by surprise.
The company reportedly did not possess an engineering team dedicated to business customers or staff focused on developer relations, and lacked an enterprise AI strategy. Businesses that approached Apple asking to buy access to the company's Private Cloud Compute infrastructure were reportedly turned down. Apple is instead leaning on partners such as WebAI and Mount Thor, which provide AI tools and execution environments built on Apple hardware.
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A VMware spokesperson told The Register the Broadcom business unit "will work with and support maintainers on open source software and we will provide fixes to open source upstream for any active projects." "With Spring and RabbitMQ, we are the maintainers. For other open source software, we will work with the maintainers. We believe that the community maintainers must remain the source of truth," the spokesperson said.
This is just the sort of contribution that the open-source community wants vendors to do to reflect the value they extract from software they did not create alone. It's also the sort of thing vendors sometimes conclude they need to do to keep products based on FOSS viable.
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