FTC accuses Amazon of secret overcharging in advertising auctions
The United States Federal Trade Commission, together with the bipartisan coalition of 22 states, has filed a lawsuit on Monday claiming that Amazon has secretly overcharged advertising customers by manipulating the auction mechanism it uses to set online ad prices. The complaint alleges the scheme has generated about $20 billion of additional revenue for Amazon since 2019.
According to the suit, Amazon overrides auction results, replacing the real second‑price results with higher prices it sets itself, thereby inflating the cost paid by advertisers. The plaintiffs say this practice has hurt more than one million advertisers and, in turn, consumers, who bear the extra costs passed on to their wallets.
Amazon released a statement to the BBC saying it "strongly disagrees" with the premise that it misled advertisers, calling the lawsuit "misguided". In the same note, the company said it “does not imply that the FTC understands how advertisers operate” and that average winning bids have fallen by 50 percent from 2019 to 2025 on Amazon’s Sponsored Products search ads.
The complaint points out that Amazon’s Marketplace Sponsored Products and Sponsored Brands places are sold in a second‑price auction, where bidders normally pay one cent more than the next highest bid. Yet, the lawsuit asserts, Amazon has charged these bids nearly 80 percent of the time with its own winning bid instead of the true second‑price amount.
Amazon’s legal team argues that the FTC is “fundamentally misunderstanding” the mechanics of its ad system, and it calls the accusations a misrepresentation of the company’s business model. The company added that it has never engaged in deceptive advertising practices.
The lawsuit also highlights Amazon’s prior engagements with the FTC, including a 2025 settlement that the company paid $2.5 billion to resolve claims of enrollment of consumers in Prime without consent and withdrawal complications. The settlement required Amazon to refund millions of customers.
Following the filing of the lawsuit, Amazon’s market share has dipped 2.5 percent, reflecting investor skepticism about the potential regulatory and financial implications of the allegations. The case is still in its early stages, and it remains to be seen whether Amazon will comply with the demands or sue back for defamation.
For ongoing coverage, stay tuned to RealTime Wire's continuous live updates and interactive community chat during the unfolding of this case.
