Amazon sued by FTC, 22 US states over alleged $20 billion ad pricing scheme

The US Federal Trade Commission and 22 states have sued Amazon, accusing the e-commerce giant of secretly manipulating its advertising auctions to make brands and sellers pay higher prices for ads on its platform.

The lawsuit, filed in federal court in Washington state on August 31, alleges Amazon systematically inflated advertising prices without customers’ knowledge, costing advertisers more than $20 billion.

At the centre of the case are Amazon’s auctions for Sponsored Products, Sponsored Brands and display advertising, which allow sellers and brands to bid for prominent placements alongside product search results.

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According to the FTC, Amazon had represented its system as a “second-price” auction, under which the winning advertiser would generally pay just above the next-highest bid rather than its full bid.

The regulator alleges that Amazon instead introduced an undisclosed “soft reserve” price that could raise what the winning advertiser ultimately paid. The FTC said the practice allowed Amazon to increase prices beyond those generated through competition between advertisers.

The complaint alleges that by 2024, Sponsored Products advertisers were paying their own bid amount in around 80% of auctions, up from 30% to 40% in 2021.

More than one million brands and sellers were allegedly affected, including over 500,000 small and medium-sized businesses, according to the FTC.

The regulator also alleges that Amazon increased these surcharges during high-volume shopping periods such as Prime Day and Black Friday while concealing the changes from advertisers.

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Amazon has denied the allegations, arguing that its advertising system establishes a real-time minimum value for ads and that advertisers never pay more than they bid.

The company said improvements to its advertising technology have delivered more relevant ads and greater value to sellers, while disputing claims that its practices harmed consumers.

Amazon has grown into the world's third-largest digital advertising platform behind Google and Meta. The company generated $68 billion in advertising revenue in 2025, according to securities filings.

The case adds another front to US regulatory scrutiny of digital advertising, following antitrust action against Google over its ad-tech business.