TLDR
- The FTC and 22 states filed a federal lawsuit against Amazon on Monday over allegedly inflated advertising prices
- Amazon is accused of secretly raising minimum ad prices in online auctions, affecting 1.2 million advertisers
- The FTC alleges advertisers were overcharged by $20 billion or more since 2019 rule changes
- Amazon intervened in up to 80% of sponsored product ad auctions, according to the complaint
- The FTC is seeking “tens of billions” in damages; Amazon denies all wrongdoing
The FTC and a bipartisan group of 22 states took Amazon to federal court on Monday, claiming the company ran a years-long scheme to secretly inflate advertising prices for more than a million businesses.
FTC & 22 STATES TO SUE $AMZN OVER ALLEGED SECRET AD PRICE HIKES
The FTC is expected to allege Amazon manipulated its ad auctions by inserting its own “soft reserve” bid above the runner-up bid, effectively raising the minimum price advertisers had to pay.
The practice… pic.twitter.com/ffXicNdmxx
— Wall St Engine (@wallstengine) August 31, 2026
The lawsuit was filed in the U.S. District Court in the Western District of Washington.
What Amazon Is Accused Of
The complaint centers on three ad types: sponsored products, brand ads, and display ads. These are the ads that appear alongside search results when shoppers look for products on Amazon.
The FTC says Amazon changed its auction rules in 2019 and then quietly began pushing up the minimum prices needed to win ad placements.
According to the complaint, Amazon sometimes entered its own bids into the auctions, driving up costs for other advertisers without their knowledge.
The agency claims Amazon intervened in as many as 80% of sponsored product ad auctions.
Because advertisers paid more, businesses raised their prices to cover the extra cost, meaning consumers also ended up paying more, the FTC alleges.
The FTC says advertisers were overcharged by at least $20 billion and is seeking “tens of billions” in total damages.
Amazon Pushes Back
Amazon denied the allegations in a blog post published Monday.
The company said its advertising policies are designed to show shoppers the most relevant ads, not to inflate costs.
Amazon said the average cost per click stayed flat from 2019 to 2024, while the sales those clicks generated actually grew.
The company also said it saved advertisers around $8 billion between 2021 and 2025, and that average winning bids on sponsored product search ads fell 50% from 2019 to 2025.
“Amazon’s approach to pricing contradicts any suggestion of consumer harm,” the company said.
Amazon is already facing a separate FTC lawsuit over alleged monopoly pricing power and its relationship with third-party sellers, expected to go to court next year.
Last year, Amazon agreed to pay $2.5 billion to settle FTC claims that it deceived customers into Prime subscriptions.
Amazon is now the world’s third largest digital ad company behind Google and Meta. Its ad sales rose 26% in the second quarter of this year to $19.8 billion.
Amazon shares dropped around 2.5% on Monday following news of the lawsuit.
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