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Amazon’s Ad Auctions Face a Lawsuit, Plus 4 Tech Stories

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Amazon sellers got a fairly important lesson in platform trust Monday, Microsoft starts nudging Entra users away from text-message authentication today, and the European Union has decided ChatGPT is legally a very large search engine. There’s also a surprisingly consequential privacy bill moving through Congress, plus a Shopify reporting change that could make today’s inventory numbers look different even though nobody received a truckload overnight.

Amazon is accused of secretly changing the rules of its ad auctions

The Federal Trade Commission and 22 states sued Amazon on August 31, alleging that the company spent years telling advertisers one thing about how its ad auctions worked while charging them according to a different set of rules.

This matters because more than a million brands and sellers buy ads on Amazon, including more than 500,000 small and midsize businesses, according to the FTC. Sponsored Products and similar placements are sold through an auction. Amazon has described that system as a generalized second-price auction: you can bid, say, $5 for a click, but if the next-highest qualifying bid is $2, you’re supposed to pay only a little more than the amount needed to beat it.

The government alleges Amazon quietly changed that math beginning in 2019 by adding what it internally called a “soft reserve price.” In plain English, Amazon itself could effectively raise the price needed to win even when another advertiser hadn’t bid that amount. The complaint says Sponsored Products advertisers were paying their own full bid roughly 80% of the time by 2024, and it alleges the hidden pricing generated tens of billions of dollars for Amazon.

Those are allegations, not findings. Amazon disputes the case. In a statement reported by CBS News, the company said advertisers make bidding decisions based on actual performance rather than descriptions of auction mechanics, said average winning bids for Sponsored Products fell 50% from 2019 through 2025, and argued that its use of ad relevance saved advertisers more than $8 billion from 2021 through 2025.

I think the distinction is pretty simple. Amazon is allowed to build a complicated advertising system. The legal question is whether it represented that system one way while knowingly running it another way. If you’re an Amazon seller, there’s no reason to shut off a profitable campaign because a lawsuit was filed yesterday. But this is a good time to export your campaign history, keep your own records of cost-per-click and return on ad spend, and remember that the platform selling you the auction is also the platform defining the auction.

Ecommerce development

A good ecommerce site has to work in front of the homepage and behind it. Raymond Tec designs and builds ecommerce sites on Shopify, WooCommerce, Magento / Adobe Commerce, BigCommerce, and other major platforms — including the storefront, product catalogs, inventory, navigation, integrations, fulfillment workflows, and the machinery customers hopefully never have to think about.

Microsoft starts pushing Entra users toward passkeys today

Microsoft’s move away from text-message and voice-call authentication starts becoming visible today. Beginning September 1, Entra ID is rolling out passkeys as the default authentication experience. As the rollout reaches an organization, users who are currently enabled for SMS or voice authentication will also be enabled for passkeys and prompted to register one the next time they complete an MFA challenge.

A passkey uses public-key cryptography instead of a password or one-time code that can be copied into a fake login page. The private credential stays with your device or credential manager, while the service stores the corresponding public key. That makes passkeys far more resistant to ordinary phishing than “we just texted you six numbers.”

This is a rollout, so everybody won’t suddenly see a prompt at 9:01 this morning. The larger deadline is February 1, 2027, when Microsoft says it will stop providing SMS and voice delivery natively in Entra ID. Organizations that genuinely need those methods will be able to contract with third-party telecom providers through Microsoft’s Security Store. Microsoft says provider and pricing information is coming September 18.

If you administer Microsoft 365 or another Entra-backed environment, this is worth handling before users discover it for you. Identify accounts still relying on SMS or voice, decide which passkey method fits your devices, test recovery, and warn people that the registration prompt is legitimate. Authentication changes are considerably less exciting when the help desk knows they’re coming.

The EU now treats ChatGPT as a very large search engine

The European Commission designated ChatGPT, Reddit and Roblox under the Digital Services Act on Monday after all three reported at least 45 million average monthly users in the European Union. Reddit and Roblox are now Very Large Online Platforms. ChatGPT got the more interesting label: Very Large Online Search Engine.

That doesn’t mean Brussels thinks ChatGPT is just Google with a chat box. The Commission describes it as a hybrid service. Because ChatGPT can search the web and respond to users’ queries, that function brings it within the DSA’s search-engine rules.

The designation is triggered by size; it is not a finding that any of the three companies broke the law. They now have four months to comply with the stricter requirements applied to the EU’s largest services, including assessing and mitigating systemic risks involving illegal content, minors, physical and mental well-being, fundamental rights, elections and public safety. The Commission also gains stronger supervisory and investigative authority.

The part I find worth watching is the classification itself. AI regulation doesn’t have to wait for every legislature to invent a brand-new “chatbot law.” Regulators can sometimes look at what a service actually does and decide that an existing rule already applies. Whether that produces sensible oversight or a regulatory shoehorn will depend on what the Commission asks ChatGPT to change over the next few months.

The rules around technology matter too

Platforms, privacy, speech, competition, surveillance, copyright, and regulation increasingly determine what technology companies can build and what the rest of us have to live with. Browse more Raymond Tec News for practical coverage of technology policy and digital rights.

The House passes new limits on secret searches of cloud data

The U.S. House passed the bipartisan NDO Fairness Act, H.R. 6048, by voice vote Monday. The bill deals with non-disclosure orders: court orders that can prevent a cloud or communications provider from telling you that law enforcement sought your email, messages or other stored electronic records.

Those secrecy orders can be entirely legitimate. Telling a kidnapping suspect or someone destroying evidence that investigators are coming would defeat the point of the investigation. The problem is that the law governing stored electronic communications dates to 1986, when “my files are in somebody else’s data center” was not exactly the normal way Americans organized their lives.

The bill would require stronger judicial review and written findings, generally limit an initial non-disclosure order to 90 days, allow providers to challenge an order, and require greater transparency. A Senate version sponsored by Chris Coons and Mike Lee is already pending. The House vote does not make these changes law; the Senate still has to act and the legislation would then need the president’s signature.

This is one of those technology-policy stories where the technology is mostly invisible. Moving our private lives into Microsoft, Google, Apple and other cloud systems also moved a tremendous amount of searchable information into the hands of third parties. The rules for government access and the rules for telling us about that access matter just as much as the encryption algorithm protecting the server.

Technology is rarely just about the technology

Some of the most important technology stories aren’t product launches at all. They’re about health, privacy, education, law, accessibility, work, and what happens when technology reaches ordinary people. Browse more Raymond Tec News for the stories worth understanding without the hype.

Shopify inventory reports change what “inventory” means today

Here’s a much less dramatic change that could still confuse somebody looking at a dashboard this morning. Starting September 1, Shopify’s inventory analytics use on-hand quantity instead of available quantity.

Available means inventory that can currently be sold. On hand means everything physically at the location, including units already committed to open orders and units marked unavailable. That means reports such as days of inventory remaining, ABC product analysis, sell-through reporting and month-end inventory value may show higher quantities from today forward even if nothing physically changed.

Shopify is not rewriting the historical data. Anything before September 1 keeps the old available-quantity basis, while newer reporting uses on-hand quantity. So if a chart develops an interesting little step today, your warehouse probably didn’t reproduce overnight. The definition changed. Merchants using ShopifyQL against the inventory models should account for the same change in their own reports and automations.

That’s the theme running through this morning’s brief, really: the rules underneath a system matter. Sometimes they’re ad-auction rules nobody outside Amazon could see. Sometimes they’re authentication rules Microsoft is deliberately changing in public. And sometimes it’s one innocent-looking word in an inventory report. Knowing which rules changed is often more useful than knowing which company had the loudest announcement.

Still in a reading mood? The Raymond Tec News archive covers security, AI, small-business technology, policy, and the places technology collides with ordinary life — without requiring a computer-science degree to get through it.

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