FTC alleges Amazon illegally made $20 billion by rigging billions of ad auctions
The US Federal Trade Commission and 22 state attorneys general have sued Amazon, alleging the company secretly manipulated its advertising auctions to overcharge roughly 1.2 million advertisers by more than $20 billion (£15.8 billion) since 2019. The lawsuit claims Amazon misled advertisers into believing prices were set by fair, competitive "second-price" auctions, when in reality it quietly inserted an undisclosed "soft reserve price" to push costs above genuine auction results. Amazon has rejected the claims as "misguided", though it has not disputed the underlying mechanics of how its ad auction system works.
The FTC, whose investigation began in 2024 and drew on around 1.5 million pages of internal documents, says the scheme affected Sponsored Products, Sponsored Brands and Sponsored Display adverts shown to shoppers on Amazon's site, amounting to "billions of rigged auctions". Internal Amazon communications cited in the suit describe using an "invented auction participant" or company-calculated "proxy 2nd price" to inflate charges, a practice allegedly hidden even from Amazon's own sales staff. The case, filed in the US District Court for the Western District of Washington, seeks a permanent injunction along with civil penalties, restitution and disgorgement; it comes as Amazon reported $200.6 billion in net sales and $62.6 billion in net income for the second quarter of 2026.
- FTC and 22 states sue Amazon over alleged ad auction rigging
- Claims Amazon secretly overcharged advertisers over $20bn since 2019
- Amazon denies wrongdoing, calls FTC's lawsuit "misguided"
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Amazon sells advertising space on its shopping site, where businesses bid to have their products shown to shoppers. In a second-price auction, the winning advertiser generally pays just above the next-highest bid, rather than the full amount it offered.
The Federal Trade Commission is a US agency that enforces consumer and competition laws, and it has brought the case with attorneys general from 22 states. The allegations concern adverts for products and brands on Amazon; the company says the claims are misguided.
The dispute matters to advertisers because auction rules affect how much they pay to reach customers, and to shoppers because advertising helps shape which products appear. The court will consider the claims and Amazon’s response under US law.
Both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
The FTC and states’ case is that advertisers were led to expect prices determined by genuine competition, while an undisclosed reserve could make them pay more than the auction results warranted. If proved, concealing that mechanism at this scale would undermine trust in the marketplace and justify restitution, penalties and safeguards against repetition.
The case against
Amazon’s strongest case is that an auction may use a reserve price as a legitimate way to set the minimum price for valuable advertising inventory, and that the regulator must show the design was deceptive or unlawful rather than simply commercially advantageous to Amazon. The allegations are not yet findings by a court; the company can argue that the FTC’s interpretation of the auction mechanics and resulting advertiser harm should be tested against the full evidence and applicable law.