The US Federal Trade Commission and a bipartisan coalition of 22 states filed a lawsuit against Amazon on Monday, contending that the company engaged in a scheme to artificially inflate advertising costs for over one million customers. The complaint alleges that Amazon manipulated online auctions used to determine pricing for advertisements placed on its platform, resulting in estimated illicit gains of approximately $20 billion in revenue since 2019.
According to the legal filing, Amazon allegedly overrode legitimate auction results and substituted higher prices determined by the company itself in order to maximize profits. The complaint specifically focuses on Sponsored Product ads and Sponsored Brands placements, which compete through a second-price auction mechanism where advertisers expect to pay marginally above the second-highest bid. The lawsuit contends that Amazon charged Sponsored Products advertisers their own winning bid approximately 80 percent of the time, contrary to standard auction procedures.
The FTC and state authorities argue that consumers have suffered injury as a result of these practices, as advertisers pass increased costs onto shoppers. Amazon disputed this characterization, arguing that the FTC misunderstands how the advertising market functions and that the case does not primarily concern consumer pricing. The company noted that average winning bids on Sponsored Products search ads declined 50 percent between 2019 and 2025, and stated that roughly 92 percent of placed advertisements did not go to the highest bidder.
Amazon stated it “strongly disagrees” with the allegations and called the lawsuit “misguided.” The company’s stock declined 2.5 percent following the announcement. This case represents another significant enforcement action against Amazon, following the company’s 2.5 billion dollar settlement last year regarding Prime subscription enrollment practices.
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