Amazon sued over alleged $20B ad overcharges
What's the story
The US Federal Trade Commission (FTC) and 22 states have filed a lawsuit against Amazon, accusing the tech giant of manipulating digital advertising prices on its platform. The lawsuit alleges that Amazon secretly raised the minimum prices advertisers had to pay to promote their products. This alleged manipulation could have resulted in billions of dollars in extra costs for advertisers.
Auction manipulation
Allegations of deception in advertising auction system
The FTC's complaint centers on Amazon's advertising auction system, where advertisers thought they were participating in a legitimate second-price auction.
However, the complaint alleges that Amazon introduced hidden surcharges that effectively undermined this system while keeping the changes under wraps from advertisers.
The percentage of Sponsored Products auctions where advertisers paid their own bid jumped from 30-40% in 2021 to 70% in 2022 and around 80% in 2024.
Concealment charges
Amazon's alleged deception and advertiser concerns
The FTC claims Amazon purposely kept the pricing changes hidden, fearing that advertisers would lower their bids if they understood how the system had changed.
The complaint further alleges that Amazon continued to deceive advertisers and didn't provide clear answers when they raised concerns, leaving details ambiguous.
This alleged manipulation has resulted in over $20 billion in overcharges for 1.2 million customers, according to the lawsuit.
Rebuttal
Amazon calls allegations 'misguided'
In response to the lawsuit, Amazon has called the allegations "misguided" and "flawed." The company claims that regulators have "cherry-picked" old internal documents.
California Attorney General Rob Bonta, one of the states suing along with the FTC, accused Amazon of rigging billions of ad auctions.
The complaint details three advertising products involved in this case: Sponsored Products, Sponsored Brands and Sponsored Display.
Financial impact
Third major lawsuit against Amazon by FTC
Despite the allegations, Amazon's business remains strong. The company generated over $68 billion in advertising revenue last year, with a large chunk coming from sponsored product ads.
This is the third major lawsuit against Amazon by the FTC.
In September 2025, Amazon had agreed to pay $2.5 billion to settle allegations it deceived customers into signing up for subscriptions and made it hard to cancel them.