FTC and 22 States File Lawsuit Against Amazon Over Alleged Ad Pricing Manipulation

The US Federal Trade Commission (FTC) and a bipartisan group of 22 states have filed a lawsuit alleging that Amazon overcharged more than a million advertising customers by manipulating online auctions used to set ad prices. The lawsuit, filed on Monday, claims that the alleged scheme has generated approximately $20 billion for Amazon from advertising customers since 2019. According to the complaint, Amazon overrides actual auction results with higher prices to increase its profits. In a statement, Amazon expressed strong disagreement with the allegations, labeling the lawsuit as misguided. The FTC and the states also assert that consumers have been harmed as the extra costs are passed onto shoppers, stating that consumers are suffering substantial injury as a result. Amazon countered that the FTC misrepresents the case, asserting that it is not about higher prices for consumers. Following the lawsuit announcement, Amazon's shares fell by 2.5%. The complaint further alleges that Amazon charged advertisers more in 'second price' auctions, where advertisers expect to pay one cent more than the next highest bidder. However, it claims that Amazon charged its Sponsored Products advertisers their winning bid nearly 80% of the time. Amazon responded by stating that the FTC fundamentally misunderstands how advertisers operate, noting that average winning bids fell by 50% from 2019 to 2025 on Sponsored Products search ads, and that roughly 92% of placed ads are not awarded to the highest bidder. This is not the first legal challenge Amazon has faced from the FTC; last year, the company settled a case for $2.5 billion related to allegations of enrolling consumers in its Prime subscription without consent.