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The US Federal Trade Commission has published previously redacted information detailing why it’s suing Amazon.
New documents detail the alleged deceptive practices used to boost consumer prices by more than $1 billion including deliberately making Amazon search worse – a strategy reportedly approved by chairman Jeff Bezos.
Why we care. If Amazon is found guilty of charging brands high fees for showing irrelevant ads that hurt the user experience, advertisers may want to consider moving their ad spend to other platforms for a healthier return on investment and more effective ad placement.
Degrading search results. The Commission claims that Amazon’s service quality declined as it shifted from prioritizing relevant, organic search results on its online storefront (as originally directed by its founder and then-CEO Jeff Bezos), to now featuring pay-to-play advertisements. The organization says Amazon bosses knew this created “harm to users” by making it “almost impossible for high quality,
helpful organic content to win over barely relevant sponsored content.”
Junks Ads. The commission alleges that sellers are now required to pay for advertising to reach Amazon’s large online shopper base, resulting in less relevant search results and higher-priced products for shoppers. These Junk Ads are allegedly referred to as “defects” by Bezos and his staff – despite sellers paying substantial fees for them.
The impact of Junks Ads. An Amazon executive shared examples highlighting how displaying junk ads instead of organic search results negatively impacted the shopping experience during internal discussions, according to the Commission. Some results were clearly unrelated to what the customer was looking for, like an LA Lakers t-shirt ad appearing in a search for “Seahawks t-shirt.” Others were just strange, such as “Buck urine” showing up as the first Sponsored Products slot for “water bottles.”
Rejecting guard rails to protect customers. Amazon allegedly consistently rejected the idea of implementing “guardrails” on ads to protect the customer experience. Senior executives at Amazon emphasized that advertising should not be limited by additional rules, even if there were flaws in this approach.
Bezos ‘prioritizing cash over service’. Bezos reportedly directed his executives to accept more “defect” ads as he wanted to prioritize advertising revenue over improved customer services, according to the Commission. Prioritizing maximum advertising profit had effectively become the guiding principle, despite its shortcomings, according to one senior executive.