In brief
The U.S. Federal Trade Commission and 22 states have filed a lawsuit claiming Amazon has overcharged advertising customers by manipulating its online second‑price auctions. The complaint estimates the scheme has netted the company $20 billion since 2019. Amazon counters that the court misinterprets auction mechanics and that advertisers benefit from real‑world bid adjustments. The suit also claims consumers are burdened when inflated ad costs are passed on. In addition to this lawsuit, Amazon recently settled a different FTC case for $2.5 billion over unwarranted Prime memberships.
Amazon secretly overcharged more than a million advertising customers by manipulating online auctions it uses to set ad prices, according to a lawsuit filed this week by the U.S. Federal Trade Commission (FTC) and a bipartisan coalition of 22 states.
The complaint argues that, since 2019, Amazon’s scheme has generated roughly $20 billion of excess profits for the company. It claims Amazon has overridden real auction results and imposed higher prices on advertisers.
Amazon has replied that it “strongly disagrees” with the allegations and calls the suit “misguided.” In a statement to the BBC, the retailer emphasized that consumers are not harmed directly and that higher auction costs do not automatically translate to higher retail prices.
In the complaint, the FTC and states posit that any additional charges paid by advertisers will eventually be passed on to shoppers, causing “substantial injury” to consumers. Amazon insists the FTC misinterprets the need for higher fees, stressing that advertisers adjust bids based on performance data, not simple auction rules.
The lawsuit continues to highlight Amazon’s use of Sponsored Product and Sponsored Brands ads on its marketplace, where these placements are auctioned to the highest bidder. It alleges Amazon operates a “second‑price” auction but charges the winning bid close to 80% of the time.
Amazon’s history of consumer‑watchdog disputes adds context. Last year it settled an FTC case that accused it of enrolling millions of customers into Prime subscriptions with limited cancellation options, paying $2.5 billion in reparations.
The day after the filing, Amazon shares fell by about 2.5% in the markets. The outcome of the case remains to be seen.
