Amazon Accused of Unfairly Charging Advertisers in Its Billion-Dollar Advertising Business
The Federal Trade Commission (FTC) has filed a complaint against Amazon, alleging that the company's advertising system unfairly charged advertisers. According to the FTC, Amazon's second-price auction system was supposed to make honest bidding the rational choice for advertisers. However, the agency claims that Amazon actually charged advertisers their full winning bid roughly 80% of the time instead.
The complaint covers seven years of advertising activity involving more than one million brands and sellers, generating tens of billions of dollars in additional revenue for Amazon. The company's advertising operation generated $68.6 billion in 2025, making it the world's third-largest digital advertising platform behind Google and Meta.
Amazon disputes the FTC's description of its auction system, arguing that advertisers set and adjust their bids based on performance rather than relying on descriptions of the underlying auction mechanics. However, the company also points to the savings its auction system has generated for advertisers, with more than $8 billion in savings between 2021 and 2025.
The case raises questions about market power and the freedom that businesses have to walk away from Amazon's ecosystem. The involvement of 22 state attorneys general could make the financial consequences much larger, with potential penalties calculated on a per-violation or per-day basis.