Key Takeaways
- Federal regulators joined forces with 22 states to sue Amazon on Monday for allegedly manipulating advertising auction prices
- The complaint claims Amazon covertly increased floor prices in ad auctions, impacting approximately 1.2 million advertisers
- Regulators estimate businesses were overcharged by more than $20 billion following Amazon’s 2019 policy modifications
- According to court filings, Amazon allegedly interfered in as many as 80% of auctions for sponsored product advertisements
- The FTC wants damages totaling “tens of billions” of dollars; Amazon rejects the allegations entirely
Federal regulators alongside a coalition of 22 states from both parties brought legal action against Amazon on Monday, alleging the tech giant orchestrated a multi-year operation to artificially raise advertising costs for over one million business customers.
FTC & 22 STATES TO SUE $AMZN OVER ALLEGED SECRET AD PRICE HIKES
The FTC is expected to allege Amazon manipulated its ad auctions by inserting its own āsoft reserveā bid above the runner-up bid, effectively raising the minimum price advertisers had to pay.
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ā Wall St Engine (@wallstengine) August 31, 2026
Regulators submitted their complaint to the U.S. District Court located in Washington’s Western District.
The Allegations Against Amazon
The legal filing focuses on three advertising categories: sponsored product listings, branded advertisements, and display advertising units. These promotional placements show up next to search results when customers browse for items on Amazon.
Regulators allege that Amazon modified its bidding system in 2019 before discreetly increasing the floor prices required to secure advertising positions.
The complaint states that Amazon periodically submitted its own competing bids during auctions, artificially escalating expenses for other advertisers who remained unaware of this practice.
The regulatory agency asserts that Amazon manipulated up to 80% of auctions for sponsored product advertisements.
As advertising expenses climbed, businesses compensated by raising product prices, ultimately shifting these increased costs to shoppers, regulators argue.
The FTC estimates that advertisers paid at least $20 billion more than they should have and is pursuing total damages in the “tens of billions.”
Amazon’s Response
Amazon refuted the accusations through a blog post released on Monday.
The e-commerce platform maintains its advertising systems are built to display the most appropriate ads to customers, not to artificially increase prices.
Amazon pointed out that average cost-per-click metrics remained unchanged between 2019 and 2024, while revenue generated from those clicks increased.
The company further stated it delivered approximately $8 billion in savings to advertisers from 2021 through 2025, noting that average successful bids for sponsored product search placements decreased by 50% from 2019 to 2025.
“Amazon’s approach to pricing contradicts any suggestion of consumer harm,” the company said.
This lawsuit represents the second major FTC legal challenge Amazon currently faces. Another pending case addresses alleged monopolistic practices and the company’s treatment of third-party marketplace sellers, with trial proceedings scheduled for next year.
In 2023, Amazon reached a $2.5 billion settlement with the FTC regarding accusations that it misled consumers into unwanted Prime memberships.
Amazon currently ranks as the third-largest digital advertising platform globally, trailing only Google and Meta. The company’s advertising revenue jumped 26% during this year’s second quarter, reaching $19.8 billion.
Amazon stock declined approximately 2.5% on Monday after news of the legal action became public.
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