FTC and 22 states sue Amazon over alleged $20 billion ad-auction overcharge scheme
The FTC and 22 states sued Amazon $AMZN, alleging it secretly overrode its own ad-auction prices on Sponsored Products, Brands and Display for seven-plus years, adding up to $20 billion in extra costs for over a million sellers. Amazon calls the suit misguided.
The Federal Trade Commission and attorneys general from 22 U.S. states sued Amazon $AMZN this week, accusing the company of secretly manipulating its own advertising auctions to overcharge sellers. According to the complaint, Amazon covertly overrode the prices set by its ad auctions and replaced them with higher rates across three products: Sponsored Products, Sponsored Brands and Sponsored Display. The FTC alleges this went on for more than seven years and affected over a million brands and sellers who bid for ad placement without knowing the final price they paid didn't match what they'd agreed to in the auction. Regulators put the total overcharge at $20 billion or more. Amazon has pushed back hard, calling the lawsuit misguided and flawed, and arguing the FTC cherry-picked outdated internal documents. The company says its ad auctions actually saved advertisers $8 billion between 2019 and 2024 and that the complaint offers no evidence of real consumer harm. The case lands directly on one of Amazon's most profitable and fastest-growing businesses. Advertising has become a core profit engine for the company as retail margins stay thin, and the outcome could force Amazon to open up its ad-pricing algorithms to outside scrutiny for the first time. For the more than a million merchants who rely on Amazon ads to get found on the platform, the suit raises a basic question: whether the price they pay to compete for shelf space has ever matched what they were told.