The FTC and 22 state attorneys general sued Amazon on Monday, alleging it quietly inflated its own advertising auctions for seven years and collected more than $20 billion in surcharges advertisers were never told about.
Why it matters
Amazon’s ad business is a $68 billion-a-year engine bolted onto its store. The government’s claim is that the engine was rigged — and that the cost landed on about a million brands and sellers before working its way into the price tags shoppers see.
Driving the news
The case was filed Aug. 31 in federal court in Seattle, the Western District of Washington, by the FTC and 22 states. — via FTC
At the center is a broken promise about how the auctions worked. Amazon told advertisers it ran second-price auctions, where the winner pays a penny more than the next-highest bid. Starting in 2019, the complaint says, it began adding undisclosed markups it called “soft reserve prices.”
The complaint alleges shill bidding. Amazon is accused of inserting “invented auction participants” and proxy bids that turned a second-price auction into a first-price one in practice. — via FTC
The surcharges allegedly spiked during Prime Day and Black Friday, the highest-volume shopping stretches of the year.
By the numbers
More than $20 billion — undisclosed surcharges the FTC says Amazon collected since 2019 — via BPR
$68 billion — Amazon’s advertising revenue last year
About 1 million — brands and sellers the agency says were affected
80% — share of 2024 auctions where advertisers paid their own full bid, up from 30 to 40% in 2021
$2.5 billion — what Amazon paid last year to settle a separate FTC case over Prime sign-ups
What they’re saying
FTC Chairman Andrew Ferguson said Amazon “has millions of advertising customers who were misled into paying significantly higher prices.” — via FTC
The complaint also quotes Amazon’s own internal documents, which warned the surcharges risked “irrevocable damage to advertiser trust.”
The other side
Amazon calls the case misguided. The company says it gave advertisers guidance about auctions and pricing inside the tools they use to run campaigns, and that the FTC has no evidence any of it raised consumer prices. It says its auction changes saved advertisers $8 billion between 2021 and 2025. — via Amazon
The intrigue
This is Ferguson’s FTC going after Amazon. Antitrust pressure on Big Tech didn’t leave with the last administration — it changed hands, and the target list looks familiar.
What’s next
Amazon is expected to move to dismiss. The hinge of the case is whether the government can show the surcharges actually reached consumers — Amazon’s defense is that the FTC never connects the ad auction to the shelf price.
The bottom line: The FTC isn’t only alleging Amazon charged too much. It’s alleging Amazon described one auction to its customers and quietly ran a different one.