Learn about the story, Amazon, Google Probed by FTC Over Search Advertising Practices from Bloomberg Podcasts, along with reading the article, US FTC probes Google, Amazon over search advertising practices, from MSN.

According to the article, the U.S. Federal Trade Commission (FTC) is investigating whether Amazon.com and Alphabet's Google misled advertisers that place advertisements on their websites.

The investigations are being conducted by the FTC's consumer protection unit and focus on whether Amazon and Alphabet properly disclosed terms and pricing for advertisements.

The agency is seeking details about Amazon's advertising auctions and whether it disclosed "reserve pricing" for some search ads, according to the source. Reserve pricing refers to the minimum price advertisers must accept before they can purchase an advertisement.

The FTC is also examining Google's practices, including its internal pricing process and whether it increased the cost of advertisements in ways that were not disclosed to advertisers, the source said.

Discussion Questions

  1. Explain the role and responsibilities of the Federal Trade Commission (FTC).

    The Federal Trade Commission (FTC) is an independent agency of the U.S. federal government whose primary mission is to protect consumers and promote fair competition in the marketplace.

    The FTC protects consumers from deceptive, unfair, or fraudulent practices in the marketplace. It investigates complaints regarding false advertising, scams, privacy violations, and fraud. It enforces rules against unfair or deceptive business practices; acts against fraudulent marketing (both online and offline); issues consumer alerts and educational materials; and regulates and enforces laws related to data privacy and cybersecurity.

    The FTC enforces antitrust laws to prevent anticompetitive mergers, monopolies, and business practices. It creates rules and regulations to clarify and enforce laws under its jurisdiction. It can bring civil enforcement actions in federal court or through its internal administrative law process.

    Finally, the FTC investigates companies for failing to protect consumer data, enforces data breach response standards, and holds companies accountable for misrepresenting how personal information is collected, stored, or shared.

  2. What is reserve pricing?

    As indicated in the article, reserve pricing refers to the minimum price a seller is willing to accept in an auction. In the context of this case, reserve pricing refers to the minimum price for an online advertisement. An auction “with reserve” should be contrasted with an auction “without reserve”—In an auction without reserve, the owner agrees to sell for the highest price bid, regardless of what the bid amount might be.

  3. Is there enough information presented in this article to conclude, by a preponderance of the evidence (the civil burden of proof) or beyond a reasonable doubt (the criminal burden of proof) that Amazon.com and/or Alphabet's Google misled advertisers that placed advertisements on their websites? Why or why not?

    This is an opinion question, so student responses may vary. In your author’s opinion, there is not enough evidence to conclude, either civilly or criminally, that Amazon.com and/or Alphabet’s Google misled advertisers that placed advertisements on their websites. In this case, the FTC may have additional evidence within its access that has not yet been disclosed to the media, or the FTC plans to uncover such evidence during the course of the “discovery” phase of litigation (In the discovery phase of litigation, both parties are entitled to request evidence the other side has within its possession that is pertinent to the litigation and its outcome).