The US Federal Trade Commission (FTC) and 22 states have sued Amazon, alleging it secretly manipulated its online advertising auctions to overcharge more than a million advertisers, netting the company roughly $20bn since 2019. The complaint, filed in Washington state, claims Amazon overrode genuine auction outcomes with higher, company-set prices to boost profits, and argues the extra costs were ultimately passed on to shoppers. Amazon has strongly rejected the allegations, calling the lawsuit "misguided", and its shares fell 2.5% after the case was announced.

The dispute centres on Amazon's "second price" auctions for Sponsored Product and Sponsored Brand ads, in which advertisers expect to pay just one cent more than the next-highest bidder. The FTC alleges Amazon instead charged advertisers their full winning bid nearly 80% of the time, driven by dissatisfaction with auction revenue. Amazon countered that the FTC misunderstands how advertising works, noting that average winning bids fell 50% between 2019 and 2025 and that 92% of ad placements do not go to the highest bidder. This follows Amazon's $2.5bn settlement last year over claims it enrolled Prime customers without consent.