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The US Federal Trade Commission (FTC) has sued e-commerce giant Amazon, accusing the company of secretly inflating online advertising prices and extracting more than $20 billion in excess payments from advertisers.
The lawsuit was filed in federal court in Washington state, with 22 US states joining the FTC as co-plaintiffs.
According to the complaint, Amazon has manipulated auctions for advertisements displayed on its search pages since 2019, secretly collecting additional payments from advertisers without their knowledge.
Alleged secret pricing tactics
The FTC alleges that Amazon violated standard practices governing digital advertising auctions. Under the commonly used system, the price paid by a winning advertiser is generally based on the second-highest bid.
However, the regulator claims Amazon interfered with about 80% of its auctions and charged winning advertisers their full highest bids.
The FTC said the practice affected at least 1.2 million businesses, including small and large sellers that regularly advertise on Amazon. It also alleged that higher advertising costs ultimately contributed to higher prices for consumers.
Amazon denies allegations
Amazon has denied the allegations, saying its advertising auction system is highly competitive and that product relevance, rather than bid price alone, plays the most important role in selecting winning advertisements.
The Seattle-based company also disputed the FTC’s claims that advertising costs increased, saying the average cost per advertising click remained unchanged between 2019 and 2024.
Amazon further said its technology helped advertisers save about $8 billion between 2021 and 2025.
Amazon is currently the world’s third-largest digital advertising company, behind Google and Meta. Its shares fell about 2.5% following news of the lawsuit.