Complaint says Amazon bid against its own advertisers for seven years

Amazon inserted a "soft reserve" into the auctions that decide which seller adverts appear on its site, according to a federal complaint reported by Inc.

The complaint alleges the mechanism raised the prices advertisers paid, and that advertisers were not told it existed.

The period covered is seven years. The alleged cost to advertisers is put at more than $20bn.

A reserve in an auction is a floor: bids below it do not win. A soft reserve set by the platform running the auction means the platform is, in effect, on the other side of the bidding from its own customers.

The allegations are untested. They are contained in a complaint, and a complaint is one side's account of events.

For a founder selling on a marketplace, the practical question is not the litigation but the ad account.

Marketplace advertising is usually bought at a bid, not a price. What you actually pay per click is set by an auction whose rules the marketplace writes and can change.

Two things are worth pulling before any legal outcome arrives. The first is your own cost-per-click history over the last several years, set against the bids you told the platform you were willing to pay.

The second is the share of your revenue that now goes to advertising on the platform, compared with the share that went there when you started.

Neither number proves anything about the complaint. Both tell you how much of your margin is priced by someone else's auction.

Amazon's response to the complaint has not been reported here, and no hearing date has been made public.