In brief
A lawsuit filed by the U.S. Federal Trade Commission and a coalition of 22 states alleges that Amazon secretly inflated advertising prices by overriding auction results. The claim points to fraudulent practices that may have enabled the retailer to earn $20bn from advertisers since 2019. Amazon denies the allegations and describes the lawsuit as misguided, while the FTC stresses broader consumer harm. The case adds to a growing scrutiny of Amazon’s ad operations amid past regulatory confrontations.
The U.S. Federal Trade Commission and a bipartisan group of 22 states have filed a lawsuit alleging that Amazon secretly overcharged more than a million advertising customers by manipulating the auction process that sets online ad prices.
According to the complaint, Amazon has allegedly earned an estimated $20bn (£14.8bn) from advertisers since 2019 by overriding auction outcomes with higher prices. The suit claims Amazon used "second‑price" auctions—where the winning bidder is charged one cent more than the next highest bid—to covertly charge its Sponsored Product advertisers their own winning bid close to 80% of the time.
Amazon has responded saying it "strongly disagrees" with the premise that it misled advertisers and calls the lawsuit "misguided." In a statement to the BBC, the company noted that it emphasizes legitimate advertising returns and that the algorithmic mechanisms are misunderstood by the FTC."
Beyond advertisers, the FTC and the 22 states argue that consumers are also harmed, as the extra costs are passed on to shoppers. They contend that consumers have suffered substantial injury and will continue to do so.
Amazon’s shares fell 2.5% on the day the lawsuit was announced, reflecting market concerns. The case adds to a history of regulatory scrutiny, including a 2025 settlement of $2.5bn over allegations that Amazon enrolled consumers in Prime subscriptions without proper consent.
For further details, reviewers can refer to the FTC’s complaint and Amazon’s prior legal disclosures regarding the company’s advertising practices.
