# FTC and states lawsuit against Amazon advertising > Live situation record from CLSTR: https://clstr.news/situations/ftc-and-states-lawsuit-against-amazon-advertising > Updated: 2026-09-07T06:00:26.000Z. Sources: 133. Developments: 2. The US Federal Trade Commission (FTC) and 22 state attorneys general have filed a lawsuit against Amazon, alleging the company manipulated online advertising auctions to inflate costs. The complaint claims that since approximately 2019, Amazon transitioned from standard second-price auctions to a system utilizing an undisclosed “soft reserve price.” This mechanism reportedly acts as a phantom bidder, forcing advertisers to pay their full bids more frequently. Regulators allege this practice has affected roughly 1.2 million advertisers, including 500,000 small and medium-sized businesses, potentially generating over $20 billion in additional revenue for Amazon. The FTC notes that the frequency of these occurrences rose from approximately 4% in late 2020 to between 79% and 80% in 2024. The lawsuit asserts these costs are often passed to consumers through higher product prices. Legal filings indicate the manipulation specifically targeted sponsored listings designed to increase product visibility in search results. This comes as Amazon’s advertising revenue reached $68.6 billion in 2025, making it the world’s third-largest digital advertising seller behind Meta and Google. Amazon has denied the allegations, describing the lawsuit as “misguided” and stating it intends to defend itself in court. The company maintains its auction system is transparent and notes that average winning bid prices for sponsored products decreased by 50% between 2019 and 2025. Following the news of the legal action, Amazon’s shares experienced a decline of approximately 2.5%. ## Claims - Amazon shares fell between 2.5% and 3% following the news of the lawsuit. (disputed by 12 sources) - Amazon shares fell over 3%, resulting in an approximately $86 billion loss in market value. (disputed) - The FTC and a bipartisan group of 22 state attorneys general filed a lawsuit against Amazon alleging the company deceived advertisers by secretly raising minimum ad prices. (corroborated by 44 sources) - The alleged practice affected approximately 1.2 million advertisers, including over 500,000 small and medium-sized businesses. (corroborated by 33 sources) - The lawsuit alleges Amazon illegally obtained over $20 billion from advertisers through these practices. (corroborated by 32 sources) - Amazon allegedly began using a 'soft reserve' mechanism in 2018 to secretly raise minimum advertising prices. (corroborated by 27 sources) - Amazon allegedly manipulated advertising prices for seven years using 'soft reserve' bids to increase minimum costs. (corroborated by 26 sources) - The alleged price manipulation earned Amazon tens of billions of dollars over a seven-year period. (corroborated by 23 sources) - Amazon denied the accusations, stating that advertisers adjust their bids based on real-world performance rather than auction mechanics. (corroborated by 18 sources) - Amazon previously paid a $2.5 billion fine regarding Amazon Prime subscription practices. (corroborated by 14 sources) - Amazon's digital advertising platform earned approximately $68 billion in revenue in 2025. (corroborated by 13 sources) - The FTC plans to file a lawsuit against Amazon alleging the company manipulated advertising prices. (corroborated by 3 sources) ## Timeline ### 2026-09-07: Amazon sued by FTC for allegedly manipulating ad auctions The FTC and 22 state attorneys general are suing Amazon, alleging the company manipulated ad auctions to generate $20 billion in extra revenue since 2019, leading to higher costs for sellers and consumers. 4 sources. https://clstr.news/cluster/amazon-sued-by-ftc-for-allegedly-manipulating-ad-auctions ### 2026-08-31: Amazon sued by FTC and 22 states over alleged ad auction manipulation The FTC and 22 states are suing Amazon, alleging the company manipulated ad auctions to secretly overcharge advertisers, potentially netting over $20 billion since 2019. 130 sources. https://clstr.news/cluster/amazon-faces-ftc-lawsuit-over-alleged-advertising-price-manipulation --- Cite as: FTC and states lawsuit against Amazon advertising. CLSTR, https://clstr.news/situations/ftc-and-states-lawsuit-against-amazon-advertising