[REVISION HISTORY]

FTC and states lawsuit against Amazon advertising

Updated 2 times since CLSTR started tracking revisions of this situation.

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2026-09-02 09:43 UTC → 2026-09-07 12:08 UTC · added ~~removed~~

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%.

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