Amazon Sued for Allegedly Inflating Ad Auction Prices with Hidden Surcharge

The Federal Trade Commission (FTC) and 22 states have filed a lawsuit against Amazon for allegedly misleading advertisers about their advertising auction prices. The complaint, filed in the Western District of Washington, claims that Amazon secretly inflated the prices that approximately 1.2 million advertising customers paid to place ads on its shopping platform through a hidden surcharge.

The FTC and the coalition of states allege that Amazon's technology company used an auction process called a generalized-second-price model, but in reality, the price was inflated with a hidden surcharge. This allegedly happened from 2015 to 2022. The plaintiffs estimated that more than $20 billion was 'illegally extracted' from Amazon's advertising customers.

Amazon has responded to the lawsuit by calling it 'misguided' and disputing the facts of the case. In a blog post, the company stated that advertisers adjust their bids based on real-world performance, not descriptions of auction mechanics. Amazon also estimated that advertisers saved over $8 billion from 2021 to 2025 due to its prioritization of ad relevancy over selecting ads on bid price alone.