The Federal Trade Commission and 22 states filed a lawsuit against Amazon to address allegations of overcharging advertisers for ad space.
The Federal Trade Commission and 22 states filed a lawsuit against Amazon, accusing the company of deceiving businesses by overcharging for advertisements on its retail platform. The lawsuit claims that Amazon secretly manipulated its auction system starting in 2018 to increase prices without the knowledge of 1.2 million advertisers.
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These actions, including hidden surcharges and artificial bids, allegedly extracted over 20 billion dollars from customers, nearly half of whom were small or medium-sized businesses. The FTC claimed these higher costs were eventually passed down to shoppers. Amazon strongly disagrees with the lawsuit, stating the agency fundamentally misunderstands how advertisers operate. Amazon stated that advertisers adjust bids based on real-world performance rather than auction mechanics. The company estimated that advertisers saved over 8 billion dollars from 2021 to 2025 because Amazon prioritized ad relevancy over bid price alone. Amazon also noted that it shared data with the FTC on multiple occasions but noted the agency appeared focused on a monetary victory. This is the third major lawsuit filed by the FTC against Amazon. In 2023, Amazon settled for 2.5 billion dollars over deceptive Prime enrollment practices and paid another 30 million dollars for user privacy violations regarding its Alexa and Ring products.