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.