The FTC says Amazon secretly added fees to ad auctions and misled advertisers about winning bids.
Why it matters: The case could hit Amazon's ad margins and the costs advertisers pay to reach shoppers on its platform. It also raises fresh regulatory risk for one of Amazon's fastest-growing businesses.
- The FTC and 22 states filed suit Aug. 31, 2026 in federal court in Washington state.
- The complaint says Amazon told advertisers its Sponsored Products auctions were second-price auctions, but often charged winners their own bid.
- The FTC alleges Amazon started an undisclosed surcharge in 2019 and hid the change from advertisers.
- Amazon denied the allegations and said advertisers saved more than $8 billion from 2021 to 2025.
The FTC and 22 states sued Amazon in the U.S. District Court for the Western District of Washington, accusing it of deceptive and unfair practices in its search ad auctions. The agency says Amazon described its Amazon Ads system as a second-price auction, where the winner pays the next-highest bid, but in practice often charged Sponsored Products advertisers their own winning bid.
In the complaint, the FTC says Amazon began adding an undisclosed surcharge in 2019 and called it a soft reserve price. The agency says Amazon did not tell advertisers about the change. The complaint also says Amazon used a hidden proxy 2nd price mechanism and an invented auction participant, which the FTC says helped raise ad prices.
The FTC alleges the approach generated tens of billions of dollars in revenue and pushed prices higher on major shopping days including Prime Day and Black Friday. The complaint also says Amazon's public Amazon Ads pages said bidding was a second-price auction and that the winner pays the second-place bid. Those materials were cited in the FTC's filing and press release here, and the complaint is available here.
Amazon rejected the case, calling it misguided. In its response, the company said advertisers adjust bids based on performance rather than auction mechanics and estimated advertisers saved more than $8 billion from 2021 to 2025 because Amazon uses ad relevancy in its auction. Amazon's response is here.
AP reported that 22 states joined the federal case, including California, New York, Florida, Washington and others. AP's report is here.
By the numbers
- 22 states - joined the FTC in the lawsuit, according to AP.
- $8 billion - Amazon's estimate of advertiser savings from 2021 to 2025.
- 2019 - the year the FTC says Amazon began the undisclosed surcharge.
Yes, but: Amazon disputes the complaint and says its auction design lowers costs by factoring in ad relevancy, not bid price alone.