FTC, 22 US States File Lawsuit Against Amazon Over Ad Sales Practices
Synopsis
The FTC and 22 US states have sued Amazon, accusing the company of secretly increasing advertising prices and costing advertisers billions of dollars. Amazon denies the allegations.
FTC Accuses Amazon of Raising Ad Prices
The US Federal Trade Commission (FTC) has accused Amazon of unlawfully increasing advertising costs for businesses. According to the agency, Amazon quietly raised the minimum amount advertisers had to pay to promote their products.
The FTC, along with 22 US states, claims Amazon increased prices in advertising auctions without informing advertisers. The agency estimates that the practice cost advertisers more than $20 billion.
The FTC said it plans to seek tens of billions of dollars in damages, although the final amount has not yet been determined.
Amazon Denies Wrongdoing
Amazon rejected the allegations in a blog post, saying its advertising policies are intended to help shoppers see products that are relevant to their searches.
The company said the average cost per click for advertisers remained stable between 2019 and 2024, even as sales generated from those clicks increased.
Amazon also said its policies helped advertisers save roughly $8 billion between 2021 and 2025. The company reported that average winning bids for sponsored product search ads dropped by 50% from 2019 to 2025.
How the Advertising System Works
The lawsuit focuses on sponsored product, brand and display ads that appear alongside Amazon search results.
The FTC’s claims relate to changes Amazon made to its advertising auction rules in 2019. In these auctions, advertisers compete against one another for the opportunity to have their ads displayed when shoppers search for products.
According to the FTC, Amazon sometimes entered its own bids into these auctions, which could increase the prices paid by other advertisers. The agency also alleges that Amazon attempted to conceal these bids from advertisers.
The FTC argues that higher advertising costs could ultimately encourage businesses to raise the prices of their products. The complaint claims Amazon intervened in as many as 80% of sponsored product auctions.
Amazon’s Growing Advertising Business
Amazon has significantly expanded its advertising operation and is now the world’s third-largest digital advertising company, behind Google and Meta.
The company’s advertising revenue increased 26% in the second quarter of this year, reaching $19.8 billion. In 2025, Amazon’s advertising sales rose 22% to $68.6 billion.
Amazon maintains that its advertising pricing strategy does not harm consumers and says it continues to work toward keeping its retail and grocery prices competitive.
Amazon Faces Other FTC Cases
The latest lawsuit adds to Amazon’s ongoing legal disputes with the FTC. Last September, Amazon agreed to pay $2.5 billion in fines and refunds to Prime subscribers to resolve allegations that it misled customers into signing up for subscriptions.
Amazon is also expected to face the FTC in court next year in a separate case. In that lawsuit, the regulator has accused Amazon of illegally exercising control over prices and its relationship with third-party sellers. Amazon shares dropped nearly 2.5% on Monday following the latest lawsuit.
Source: Reuters
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