Amazon Accused of Secretly Inflating Ad Prices by Over $20 Billion
The Federal Trade Commission (FTC) has filed a federal lawsuit against Amazon.com Inc. (NASDAQ:AMZN), accusing the company of secretly manipulating advertising auctions and extracting over $20 billion from more than 1.2 million advertisers.
According to the FTC, Amazon misrepresented how it priced Sponsored Products and other ads, using undisclosed 'soft reserve prices' beginning in 2019. The agency alleges that the company used an 'invented auction participant' to push prices higher, resulting in advertisers paying their full bid roughly 30% to 40% of the time in 2021, 70% in 2022, and about 80% by 2024.
FTC Chair Andrew Ferguson said Amazon has 'millions of advertising customers who were misled into paying significantly higher prices.'
Amazon publicly described its system as a 'second price' auction, but the FTC claims this was misleading. The company generated $68.6 billion in advertising sales in 2025, making it the world's third-largest digital advertising platform behind Alphabet Inc. and Meta Platforms Inc.