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FTC and states sue Amazon over alleged ad pricing overcharges
The lawsuit alleges the scheme has likely generated about $20 billion in revenue from advertisers since 2019 and points to Amazon's use of auction-style pricing for Sponsored Product and Sponsored Brands ads.
The US Federal Trade Commission and a bipartisan group of 22 states filed a lawsuit alleging Amazon secretly overcharged more than a million advertising customers by manipulating online auctions used to set ad prices. The FTC and states say the alleged scheme has likely netted Amazon about $20 billion from advertising customers since 2019, and that some of the added costs may have been passed on to shoppers.
The complaint alleges Amazon overrides and replaces the auction results with higher prices to increase profits, particularly through so-called second price auctions. It also claims Amazon has charged Sponsored Products advertisers their own winning bid close to 80% of the time.
Amazon pushed back, saying the FTC misunderstands how its ad market works and arguing the case is not really about higher consumer prices. In its statement, Amazon also said average winning bids fell 50% from 2019 to 2025 on Sponsored Products search ads, and that roughly 92% of placed ads are not awarded to the highest bidder.
The filing follows an earlier FTC case involving Amazon Prime enrollment, where Amazon settled for $2.5 billion, including civil penalties and consumer refunds. After news of the ad pricing lawsuit, Amazon shares closed 2.5% lower on Monday.