The Federal Trade Commission (FTC), joined by 22 state attorneys general, filed a lawsuit Monday against Amazon, alleging the company manipulated advertising prices on its platform to extract tens of billions of dollars from advertisers. The complaint, filed in federal court in Seattle, accuses Amazon of secretly placing its own bids in ad auctions since 2018 to artificially inflate prices, particularly for its Sponsored Products, Sponsored Brands, and Sponsored Display ad offerings.
According to the FTC, Amazon’s insertion of covert bids—referred to as “shill bids”—raised the minimum price advertisers had to pay, boosting costs by around 50% on major shopping days such as Prime Day and Black Friday. The suit claims this practice led to over $20 billion in overcharges to more than 1.2 million advertisers over seven years. Officials said Amazon covertly intervened in auctions 70% to 80% of the time in recent years without notifying customers, effectively overriding genuine auction results with higher prices set by the company.
The states participating in the lawsuit include California, Florida, New York, Louisiana, Iowa, and 17 others across the country. FTC Chair Andrew Ferguson characterized the conduct as unfair and deceptive, emphasizing the broad impact on small and large advertisers alike. The complaint also notes that the increased fees were largely passed on to consumers through higher retail prices.
Amazon strongly denied the allegations, stating that its advertising system properly discloses how auctions operate and arguing that advertisers adjust their bids based on campaign performance rather than internal auction mechanics. The company rejected the notion that it engaged in deceptive conduct, calling the FTC’s characterization “patently false.” Amazon further asserted that from 2021 to 2025, advertisers actually saved over $8 billion because the platform prioritized ad relevance over bid price alone.
The lawsuit alleges that Amazon’s bidding strategy undermines the traditional “second-price auction” format used by the platform, where advertisers pay just above the second-highest bid rather than their maximum bid. By inserting an artificial bidder, Amazon would raise the auction floor, increasing prices beyond what advertiser competition would normally produce. A former Amazon employee cited in the complaint reportedly stated that Amazon’s surcharges allowed it to secure prices higher than those achievable through genuine competition.
This is the FTC’s third major legal case against Amazon, following a 2025 settlement in which the company paid $2.5 billion over charges related to its Prime subscription practices. Amazon is currently the third-largest digital advertising platform globally, generating $68 billion in ad revenue last year, behind only Google and Meta.
The litigation adds to heightened scrutiny of dominant digital platforms and their advertising models. Previous antitrust actions against other tech giants have focused on comparable concerns about market power and pricing practices. Amazon’s stock price fell 2.5% to $259.77 following news of the lawsuit. The case is ongoing, with potential implications for online advertising transparency and marketplace fairness.