In brief
The Federal Trade Commission, backed by a bipartisan coalition of 22 states, has filed a lawsuit claiming that Amazon rigged its online ad auctions to overcharge advertisers, accumulating an estimated $20 bn in excess revenue since 2019. Amazon denies the allegations, arguing that its auction mechanics are transparent and that advertisers adjust bids based on performance, not fixed costs. The complaint also contends that the inflated ad prices ultimately increase consumer costs on the platform. Amazon’s stock fell 2½ % in a single day following the announcement.
Amazon Accused of Overcharging Advertisers
On Monday, the United States Federal Trade Commission (FTC) and a bipartisan coalition of 22 states filed a lawsuit alleging that Amazon secretly modified the outcomes of its online advertising auctions, resulting in higher prices paid by advertisers. The complaint claims that Amazon netted an estimated $20 bn in extra revenue from advertising customers since 2019.
According to the suit, Amazon “overrides and replaces the actual auction results with higher prices set by Amazon to increase its profits.” The FTC has said the practice not only harms advertisers but also leads to higher consumer prices when the cost is passed on to shoppers.
Amazon responded that it “strongly disagrees” with the premise that it misled advertisers and called the suit “misguided.” The company further argued that “advertisers adjust bids based on real‑world performance,” not on auction mechanics. It noted that average winning bids fell 50 % from 2019 to 2025, and that roughly 92 % of placed ads are not awarded to the highest bid.
In the complaint, the FTC states that Amazon’s actions were driven by a desire to boost advertising revenue, and that the company’s practices are illegal under antitrust law. The suit seeks unpaid claims, damages, and penalties if the court finds the company liable.
Amazon’s share price fell 2.5 % in a single day following the news. The case also comes after Amazon’s 2025 settlement with the FTC over its Prime subscription program, where it agreed to pay $2.5 bn to resolve claims that customers were enrolled and kept in the service without proper consent.
The lawsuit is part of a broader push by regulators to scrutinize dominant markets in tech, especially where companies control both product and ad marketplaces. If the claims are upheld, it could lead to significant changes in how Amazon—and other e‑commerce platforms—manage advertising revenue and customer pricing.
Read the full FTC filing for more details and the court’s response.
