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FTC alleges Amazon illegally made $20 billion by rigging billions of ad auctions
FTC says firm replaces actual ad-auction results “with higher prices set by Amazon.”
The Federal Trade Commission and 22 states sued Amazon yesterday, alleging that it has conducted a secret scheme to overcharge advertisers for seven years.
“Since 2019, Amazon.com, Inc. has secretly and systematically overcharged its approximately 1.2 million advertising customers by manipulating the ‘auctions’ that it uses to set the price of ads on its platform,” the lawsuit said. “Amazon represents, and advertisers believe, that competitive auctions set the prices for advertising on its leading e-commerce website. But, in reality, Amazon overrides and replaces the actual auction results with higher prices set by Amazon to increase its profits.”
The FTC said it obtained internal documents and messages that reveal how Amazon secretly inflated auction prices for Sponsored Products, Sponsored Brands, and Sponsored Display advertisements that appear alongside results seen by consumers when they search for a product. The FTC investigation began in 2024.
“Based on numerous internal documents describing its ‘hidden’ ‘surcharges,’ Amazon’s scheme has likely illegally extracted over $20 billion from its unwitting advertising customers,” according to the lawsuit filed in US District Court for the Western District of Washington.
The FTC lawsuit was joined by a bipartisan group of 22 state attorneys general from Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont, and Washington.
The lawsuit said Amazon has conducted “billions of rigged auctions,” imposing “hidden surcharges on advertisers almost every time a shopper clicks on an advertisement on the Amazon website. Amazon’s deception continues to this day” and deprives customers “of the benefits of competition and fair and transparent dealing,” the FTC said.
The FTC and states are seeking a permanent injunction to change Amazon’s practices along with civil penalties, restitution, disgorgement, and other monetary relief. Amazon reported $200.6 billion in net sales in Q2 2026 and a net income of $62.6 billion.
Amazon yesterday issued a response that said the FTC lawsuit is “misguided.” Amazon did not dispute key claims about the mechanics of its ad auctions, but said its system did not harm consumers or advertisers.
“After reviewing approximately 1.5 million pages spanning six years, the FTC leans on a handful of simplified communications to allege a companywide effort to deceive. That is patently false,” Amazon said. It also said “the FTC cherry-picked a small number of materials, such as a few online educational videos and training content that contained older or simplified examples about how our auctions are run.”