FTC Sues Amazon Over Alleged Ad Pricing Manipulation
The Federal Trade Commission (FTC) has filed a lawsuit against Amazon, alleging that it manipulated its advertising auction system to overcharge advertisers. The FTC and 22 state attorneys general claim Amazon used a 'secret ad surcharge' in second-price auctions since 2019 by replacing the standard auction price with higher ones designed to maximize profits at the expense of advertiser efficiency. The lawsuit accuses Amazon of violating both federal law, including the FTC Act, as well as multiple state laws. It estimates that this practice may have extracted over $20 billion from advertisers. This follows a previous settlement in 2025 where Amazon paid $2.5 billion to resolve an earlier FTC case related to Prime subscription practices. Amazon has denied wrongdoing and called the lawsuit 'misguided,' arguing it misrepresents how its ad auctions functioned, noting that average winning bids for Sponsored Products search ads fell by half from 2019 to 2024. The company also disputes claims that higher advertising costs were passed on to consumers.
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