Amazon Hit with FTC Lawsuit Over Alleged Advertising Auction Manipulation

Amazon is facing a federal lawsuit from the Federal Trade Commission (FTC) and 22 states over alleged manipulation of advertising auctions on its platform. The FTC claims Amazon secretly added 'soft reserve prices' to the system, affecting millions of advertisers who were misled into paying higher prices.

The case was filed in federal court in Washington state, alleging that Amazon misrepresented how it priced Sponsored Products and other ads. Regulators claim the company used an 'invented auction participant' to push prices higher, resulting in advertisers paying their full bid around 30% to 40% of the time in 2021, rising to 70% by 2022.

Amazon strongly disagrees with the allegations, stating that the FTC's claim misunderstands how advertisers operate. The company noted that average cost-per-click for Sponsored Products remained flat after inflation from 2019 through 2024, and conversion rates rose more than 24% from 2021 to 2025.