The US Federal Trade Commission (FTC) has filed a lawsuit against Amazon.com, accusing the e-commerce behemoth of manipulating advertising prices and defrauding advertisers. The FTC lodged the complaint in a Seattle federal court on Monday, backed by a bipartisan coalition of 22 states. The filing alleges that Amazon illegally reaped $20 billion from “unsuspecting advertising customers.”
The suit claims the scheme burdened approximately 1.2 million US advertisers—including over 500,000 small and medium-sized businesses—with “significantly overcharged fees and increased costs,” which ultimately drove up consumer prices. FTC Chair Andrew Ferguson cautioned that the online retail giant's “unfair and deceptive practices” could have “staggering” consequences, noting that higher advertising costs are “largely passed on to American consumers.”
This action marks the third major federal lawsuit brought by US consumer and competition regulators against Amazon in recent years, reflecting a hardening government stance on big tech enforcement. Amazon previously settled a $2.5 billion case in 2024 over allegations it duped consumers into signing up for Prime, and agreed to pay a record civil penalty for violating regulator rules. In 2023, the company also paid $25 million to settle privacy concerns related to its Alexa voice assistant. Another suit, expected to go to trial next year, accuses the online retailer of illegally leveraging monopoly power to overcharge consumers and hinder rivals.
On Monday, the FTC alleged that Amazon has been “secretly manipulating” advertising auctions since 2018, violating federal laws prohibiting “unfair or deceptive” business practices. Amazon maintains its auctions use a “second-price” model, where advertisers are ranked by bid and relevance, paying only the minimum amount needed to outbid the second-highest bidder. However, the FTC contends that Amazon set price floors in most auctions, inflating minimum prices. The complaint asserts that Amazon charged advertisers more than the second-highest bid and levied these “undisclosed surcharges” or fees on low-margin goods like everyday essentials; these added costs were likely passed on to consumers. Court documents redacted the specific average price increase Amazon is accused of imposing.
Following the FTC news, shares of the $2.8 trillion e-commerce group slipped about 1%. Amazon responded that its ad auction methods have not raised consumer prices; after adjusting for inflation, the so-called cost-per-click for sponsored products remained flat between 2019 and 2024. Amazon acknowledged introducing “reserve prices” to ensure ad prices align with “market value,” but insists these were fully disclosed to advertisers. “The FTC’s allegations fundamentally misunderstand how advertisers operate,” Amazon said. “Advertisers adjust their bids based on actual performance, not on descriptions of how the auction mechanism works.”
Amazon’s advertising revenue reached $68.6 billion last year, ranking third globally in digital advertising behind only Google and Meta. This lawsuit is the latest move by the US government targeting what it sees as anticompetitive behavior in digital ads. Last year, a federal judge ruled in a Justice Department case that Google maintained an illegal monopoly in digital advertising, a decision that could force the company to divest parts of its business.
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