FTC and States Sue Amazon Over Advertising Auction Practices
The Federal Trade Commission and 22 state attorneys general sued Amazon on Monday, alleging the company secretly increased prices for advertisers through changes to its digital advertising auctions. The complaint, filed in federal court in Washington, claims undisclosed surcharges may have generated more than $20 billion for Amazon since 2019.
The case focuses on sponsored product, brand and display advertisements shown across Amazon’s online marketplace. According to the FTC, Amazon altered its second-price auction model in 2019 by introducing a “soft reserve price” without adequate notice, causing advertisers to pay more than the minimum amount otherwise required to secure placement.
Regulators allege the change was designed to raise advertising revenue and cite internal communications in which an executive reportedly described an “invented auction participant” used to increase prices. The agency argues that millions of advertisers paid higher costs, which it says were largely passed along to consumers through expensive products.
Amazon disputes the allegations, calling the lawsuit misguided and saying regulators misunderstand how advertisers use its systems. The company maintains that it has provided pricing and auction guidance through campaign-management tools. It says its systems saved advertisers $8 billion between 2021 and 2025 and denies evidence shows consumer prices increased.
Advertising has become a major business for Amazon, which reported more than $68 billion in ad revenue last year and ranks behind Google and Meta globally. Marketplace sellers have separately raised concerns about rising advertising expenses and recent policy changes, with some merchants withholding spending as part of a boycott.
The FTC and states seek civil penalties, restitution and other damages under federal and state consumer protection laws. The lawsuit adds to Amazon’s regulatory disputes, including a $2.5 billion Prime settlement reached in September 2025 and an antitrust case scheduled for trial next year. Amazon denies wrongdoing in that case.