Overview
- The Federal Trade Commission and attorneys general from 22 states filed a federal lawsuit Monday accusing Amazon of secretly raising ad prices for about 1.2 million advertisers by using an internal “soft reserve” and an “invented auction participant.”
- The complaint says Amazon altered auction mechanics for Sponsored Products, Sponsored Brands and Display ads starting around 2018–2019 so winners often paid their full bid roughly 70% to 80% of the time instead of the lower second-price result.
- Regulators estimate the practice likely extracted more than $20 billion from advertisers over several years and are seeking civil penalties, restitution and court orders to stop the conduct.
- Amazon called the suit misguided, said it properly disclosed pricing in its tools, argued advertisers adjust bids based on results, and said its system saved advertisers about $8 billion from 2021–2025; the company plans to defend itself in court.
- If the suit succeeds, it could force clearer rules on how platform ad auctions work, change how large digital ad platforms set prices, and lead to payouts or lower ad costs for small and mid-size sellers who rely on Amazon to reach shoppers.