US lawsuit claims that Amazon rigged $20 billion worth of ad prices
The US Federal Trade Commission and 22 states have accused Amazon of manipulating advertising auctions to overcharge more than a million customers by an estimated $20 billion since 2019.
Amazon secretly overcharged more than a million advertising customers by manipulating the online auctions used to set ad prices, according to a lawsuit filed by US regulators and 22 states.
The US Federal Trade Commission (FTC) alleges that the scheme generated around $20 billion (£14.8 billion) in additional revenue for Amazon since 2019.
The complaint states: "Amazon overrides and replaces the actual auction results with higher prices set by Amazon to increase its profits."
The lawsuit was filed on Monday (31.08.26) in Washington state, where Amazon is headquartered.
It also claims shoppers have been harmed because higher advertising costs can ultimately be passed on through product prices.
The complaint says: "Consumers are suffering, have suffered, and will continue to suffer substantial injury as a result."
Amazon strongly rejected the allegations, calling the case "misguided".
The company said: "The FTC wants the public to believe this case is about higher prices for consumers. It is not."
Amazon's shares fell 2.5 per cent on Monday following news of the lawsuit.
The case centres on advertising auctions that determine which sponsored adverts appear when shoppers search Amazon's website.
Brands and sellers bid on keywords to secure placements for Sponsored Products and Sponsored Brands adverts.
The highest bidder is typically expected to pay only slightly more than the second-highest bid under a so-called "second price" auction.
However, the FTC alleges Amazon secretly charged advertisers close to their full winning bid around 80 per cent of the time for Sponsored Products.
The complaint claims Amazon changed its approach because it was unhappy with the amount of money its advertising auctions were generating.
Amazon said the regulators had misunderstood how its advertising system works.
It said: "Advertisers adjust bids based on real-world performance, not descriptions of auction mechanics."
The company also claimed average winning bids for Sponsored Products search adverts fell by 50 per cent between 2019 and 2025.
It said roughly 92 per cent of placed adverts were not awarded to the highest bidder.
The lawsuit is the latest clash between Amazon and the FTC.
The regulator previously accused the company of enrolling millions of customers in Prime without consent and making cancellations deliberately difficult.
Amazon agreed to pay $2.5 billion last year to settle that case, including civil penalties and customer refunds.
The latest allegations will now be tested in court, with Amazon maintaining that its advertising practices do not amount to deception or unlawful price manipulation.
