The Federal Trade Commission and 22 state attorneys general filed a lawsuit against Amazon alleging the company systematically overcharged advertisers through manipulated auction mechanisms on its advertising platform. According to the complaint, Amazon Ads manipulated second-price auctions—where winning bidders should pay only slightly more than the second-highest bid—by replacing auction-determined prices with higher prices set by Amazon itself to maximize company profits. Internal communications cited in the filing indicate Amazon’s Senior Vice President acknowledged that the second price in auctions was not determined by actual bidders but calculated by Amazon as a proxy figure.
The alleged practice reportedly began in 2019 and continued through 2024, according to the FTC’s complaint. Regulators contend the manipulation extracted over $20 billion from advertising customers and that these higher costs were largely passed on to American consumers. The lawsuit alleges violations of the FTC Act and multiple state consumer protection statutes.
Amazon disputed the allegations in a company blog post characterizing the FTC’s lawsuit as “misguided.” The company claimed that average winning bids for Sponsored Products search ads actually fell 50 percent from 2019 to 2024, contradicting the government’s assertion that prices increased due to the alleged surcharge mechanism. Amazon also challenged the FTC’s claim that higher advertising costs were transferred to consumers through increased product prices.
This enforcement action represents the latest in a series of regulatory challenges faced by the e-commerce giant. The lawsuit follows Amazon’s agreement to pay $2.5 billion in settlement of a prior FTC case involving Prime subscription billing practices.
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