A coalition consisting of the U.S. Federal Trade Commission (FTC) and 22 states has initiated legal action against Amazon, alleging the e-commerce giant manipulated its internal advertising auctions to inflate prices. The complaint, filed Monday in Washington state, suggests that these practices have generated approximately $20 billion in additional revenue for the company since 2019.
According to the lawsuit, Amazon allegedly bypassed standard auction results to impose higher costs on advertisers. The filing claims that while advertisers typically expect to pay only a marginal amount above the second-highest bid in "second price" auctions, Amazon frequently charged the full amount of the winning bid—a practice the plaintiffs allege occurred in roughly 80% of cases. The complaint further argues that these inflated costs are ultimately passed down to consumers.
Amazon has rejected the allegations, labeling the lawsuit as "misguided." In a statement, the company asserted that the FTC misinterprets how advertising platforms function, noting that advertisers adjust their bids based on performance metrics. Amazon also stated that average winning bids for its Sponsored Products search ads have declined by 50% since 2019.
Following the announcement of the legal challenge, Amazon’s stock price saw a decline, closing 2.5% lower on Monday. This litigation marks another point of friction between the company and the FTC, following a 2025 settlement in which Amazon agreed to pay $2.5 billion to resolve claims regarding its Prime subscription enrollment and cancellation processes.
Source: BBC News
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