The Federal Trade Commission, joined by attorneys general from 22 states, filed a lawsuit against Amazon in U.S. District Court in Washington, marking the third major federal regulatory action against the company. The complaint centers on allegations that Amazon engaged in deceptive practices by artificially inflating the prices that approximately 1.2 million brands and sellers pay to advertise on its platform and mobile applications.
According to the lawsuit, Amazon manipulated its advertising auction system, which the company uses to sell ad placements through a competitive bidding process common in the digital advertising industry. Government attorneys contend the company’s actions constituted a scheme to misrepresent auction mechanics, ultimately depriving advertisers of fair competition and transparent dealings.
Amazon disputed the allegations in a statement released the same day, asserting that the FTC mischaracterized how its advertising auctions function and selectively presented findings. The company maintained that the quality of its advertising offerings improved over time while the average cost per click remained relatively stable when accounting for inflation. Amazon also stated the lawsuit provided no documentation showing harm to consumers.
This legal action follows other significant regulatory challenges to Amazon. Just over a year prior, Amazon agreed to a $2.5 billion settlement resolving federal allegations that its Prime membership interface used manipulative design to make subscription cancellation unnecessarily difficult for tens of millions of users. Additionally, the company faces a broader antitrust case brought by the FTC and 17 states characterizing Amazon as a monopoly that undermines competition and increases costs for both merchants and customers, with trial proceedings scheduled to commence early next year.
Amazon’s advertising division has demonstrated substantial financial growth, increasing 26 percent during the most recent quarter, with the business generating nearly $69 billion in revenue over 2025.
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