FTC and 22 States Accuse Amazon of Secretly Inflating Ad Prices

FTC and 22 States Accuse Amazon of Secretly Inflating Ad Prices
Federal and state regulators portray Amazon’s ad marketplace as a rigged system that squeezed businesses and ultimately shoppers, while Amazon says the lawsuit mistakes improving ad performance for misconduct and shows no consumer injury.

The Federal Trade Commission’s investigation began in 2022 during the Biden administration and continued under President Donald Trump. On Monday, the agency joined California and 21 other states in a federal lawsuit filed in Washington state, accusing Amazon of overcharging advertising customers by more than $20 billion since 2019.

The complaint targets the way Amazon describes its auctions to roughly 1.2 million advertisers. Regulators say advertisers were led to believe competitive bidding meant they would pay only a small amount above the next-highest bid. Instead, they allege, Amazon spent the past seven years replacing “the actual auction results with higher prices set by Amazon to increase its profits.”

FTC attorney Jonathan Platt alleged the company did not disclose the shift and concealed it. According to the lawsuit, Amazon’s testing showed advertisers could not detect the added charges; when customers questioned suspicious increases, the company allegedly denied having raised prices.

California Attorney General Rob Bonta framed the case as a small-business fight, saying Amazon had “rigged billions of ad auctions,” boosting its profits at the expense of businesses dependent on the platform to generate sales. Regulators argue that because those sellers offer groceries, medicines, clothing and school supplies, some higher advertising costs reach consumers.

Amazon rejects that account as “completely unfounded.” It says advertisers’ inflation-adjusted average cost per click on sponsored-product ads was flat from 2019 through 2024, while advertising delivered better results. Its central defense is blunt: “there is no consumer harm.”

The suit seeks damages and an order barring deceptive practices. Amazon reported about $68 billion in advertising revenue last year, raising the stakes in a case that could test how transparently dominant digital platforms must explain their pricing systems.

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