US FTC Probes Amazon, Google Over Search Advertising Practices: Report

Amazon.com (AMZN) and Alphabet’s (GOOG, GOOGL) Google are being investigated by the U.S. Federal Trade Commission (FTC) to understand whether the companies have misled advertisers who place ads on their websites.

According to a Bloomberg News report, citing people familiar with the matter, the investigations are being conducted by the FTC’s consumer protection unit and are examining whether Amazon and Google have properly disclosed the terms and pricing for advertisements.

Retail sentiment on Amazon improved to ‘extremely bullish’ from ‘bullish’ territory a day ago, with message volumes at ‘high’ levels, according to data from Stocktwits. Shares of Amazon were down 0.5% in early trading on Friday. 

The report added that judges in two separate Justice Department cases have already ruled that Google holds illegal monopolies in online search, search advertising, and the technology behind buying and selling digital ads.

Retail sentiment on Alphabet remained unchanged in the ‘bearish’ territory, with chatter at ‘normal’ levels, according to data from Stocktwits. Shares of the company were down nearly 1%.

Bloomberg noted that Google uses fast, automated auctions to sell search ads, which are triggered instantly when someone enters a query. Similarly, Amazon conducts real-time bidding to position ads, often referred to as “sponsored listings” or “sponsored ads,” within its product search results.

The report said that the FTC was looking into details about Amazon’s auctions, and the e-commerce giant has disclosed “reserve pricing” for some search ads, which is a price floor that advertisers must meet before they can buy an ad. Separately, the FTC is seeking information regarding the internal pricing process by Google and whether the cost tied to ads shot up in ways that weren’t disclosed to advertisers.

The Bloomberg report added that the investigations are underway, and that scrutiny into the biggest technology companies is still ongoing even under President Donald Trump. 

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