The US Federal Trade Commission, joined by 22 state attorneys general, filed a lawsuit against Amazon alleging a covert scheme that overcharged advertisers by substituting real ad auction results with artificially higher prices, potentially extracting over $20 billion since 2019.
- FTC claims Amazon imposed secret surcharges since 2019 on billions of ad auctions
- 22 states joined the lawsuit seeking penalties and changes to Amazon’s ad practices
- Amazon calls FTC claims misleading but does not deny auction price manipulation
What happened
The Federal Trade Commission and a bipartisan group of 22 state attorneys general have filed a lawsuit against Amazon, accusing the company of manipulating its online advertising auctions to overcharge approximately 1.2 million advertisers. The complaint alleges that since 2019, Amazon replaced actual auction results with higher internal prices, known as 'soft reserve prices,' effectively inflating ad costs.
Internal documents and communications obtained by the FTC reveal that Amazon secretly imposed these surcharges on billions of ad auctions for Sponsored Products, Sponsored Brands, and Sponsored Display ads appearing on its platform. The lawsuit states that Amazon did not disclose this pricing mechanism to advertisers and even kept it hidden from some internal sales and marketing teams.
Why it matters
This alleged scheme to override genuine auction outcomes with artificially raised prices could have illegally extracted more than $20 billion from advertisers over seven years. Such manipulation hinders fair competition by deceiving advertisers who expect transparent, competitive bidding processes that reflect true market prices.
The lawsuit, filed in the US District Court for the Western District of Washington, highlights concerns about transparency and fairness in digital advertising marketplaces, especially given Amazon's growing dominance and reported $200.6 billion in net sales and $62.6 billion net income in Q2 2026. Regulatory scrutiny underlines the challenges in policing digital advertising practices on major platforms.
What to watch next
The FTC and participating states are seeking a permanent injunction to halt Amazon’s alleged auction rigging, along with civil penalties, restitution for affected advertisers, and disgorgement of ill-gotten gains. The case will test regulatory enforcement approaches toward digital ad auction transparency and marketplace fairness.
Amazon has responded by calling the lawsuit 'misguided' and argued the evidence was selectively presented. Still, it did not dispute the auction mechanics described by the FTC. Future developments will likely shape industry standards for digital ad pricing disclosure and could prompt changes in how major e-commerce platforms manage their advertising ecosystems.