Key facts
- The FTC and 22 states sued Amazon for allegedly running a secret scheme to overcharge advertisers.
- The lawsuit claims Amazon manipulated ad auctions since 2019, imposing undisclosed surcharges.
- Advertisers were allegedly overcharged by billions, with total illicit gains estimated at over $20 billion.
- Amazon claims the FTC lawsuit is misguided and cherry-picked details, asserting its system does not harm consumers or advertisers.
The Federal Trade Commission and 22 states have filed a lawsuit against Amazon, alleging the e-commerce giant has engaged in a secret, seven-year scheme to overcharge advertisers by manipulating the pricing auctions for ads on its platform.
According to the lawsuit, since 2019, Amazon has systematically inflated prices for Sponsored Products, Sponsored Brands, and Sponsored Display advertisements by overriding actual auction results with higher prices set by the company. The FTC claims this scheme has illegally extracted over $20 billion from approximately 1.2 million advertising customers, including 500,000 small and medium-sized businesses.
The FTC stated it obtained internal documents and messages that reveal how Amazon secretly added undisclosed surcharges, referred to internally as a 'soft reserve price,' to its 'generalized second-price, or GSP auction' system, which is an industry standard. This surcharge, implemented in 2019, caused advertisers to pay more than the price determined by the competitive auction.
Amazon has denied the allegations, calling the FTC lawsuit 'misguided' and claiming the agency 'cherry-picked' a small number of documents. The company stated that its reserve pricing system, which it acknowledged using, is designed to ensure ads win at prices reflecting their true market value and does not harm consumers or advertisers. Amazon also noted that its website was updated in October 2025 to disclose reserve pricing, though the FTC contends this disclosure is insufficient.
The lawsuit seeks a permanent injunction to change Amazon's practices, along with civil penalties, restitution, and disgorgement of profits.