Amazon Ad Pricing Lawsuit
FTC prepares antitrust lawsuit against Amazon over alleged deceptive ad pricing practices.
Anonymous
Key Points
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Since 2018, Amazon reportedly changed its ad auction approach, with estimates that 70%–80% of ad auctions now see raised minimum bids and pay‑per‑click costs rising by up to 50% during major promotions.
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The alleged mechanism involves a 'soft reserve' where Amazon entered its own bids higher than the second-highest bidder, effectively bid‑against‑itself, with 'surcharges' tracked to keep the practice concealed from merchants and initially rolled out on peak shopping days.
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Amazon’s ad business is a major revenue driver, with about $68 billion in ad revenue reported for 2025, and the company is described as the third-largest digital advertising platform behind Google and Meta.
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The market reaction to the FTC inquiry has included a sharp stock drop, and the case is expected to be filed in a Seattle federal court with the backing of more than 20 state attorneys general.
The Federal Trade Commission is preparing to sue Amazon for allegedly deceiving advertisers by secretly raising minimum ad prices and rigging auctions over seven years. IJR reports that more than 20 state attorneys general are expected to join the lawsuit, which could be filed in Seattle federal court. The case marks the FTC's third major antitrust action against Amazon.
Amazon's alleged scheme involved bidding against itself through a 'soft reserve' to inflate advertising costs while hiding the practice from merchants. Yahoo Finance reports the company raised minimum bids on 70–80% of ad auctions and increased pay-per-click costs by up to 50% during peak shopping periods. Amazon's ad business generated about $68 billion in revenue for 2025, making it the third-largest digital advertising platform behind Google and Meta.
How Amazon's Ad Auction Manipulation Allegedly Worked
According to Cedar News, Amazon changed its ad auction strategy since 2018 to artificially inflate advertiser costs. The company allegedly bid against itself by entering its own offers higher than the second-highest bidder. This 'soft reserve' mechanism let Amazon pocket the difference while concealing the practice from sellers.
Forbes reports the strategy included tracking 'surcharges' to keep merchants in the dark. The manipulation was initially rolled out during peak shopping days to test effectiveness. Advertisers saw little visibility into this hidden bidding process, making it difficult to detect the price inflation.
The Scale of Amazon's Alleged Ad Revenue Scheme
Amazon's advertising business has become a major profit center. Yahoo Finance estimates that 70–80% of ad auctions were affected by the minimum bid increases since 2018. Pay-per-click costs rose as much as 50% during major shopping events like Prime Day and holiday seasons.
These pricing changes contributed tens of billions to Amazon's advertising revenue over the seven-year period. Seeking Alpha notes that the company's ad business now ranks third globally in digital advertising, behind only Google and Meta. The scale of the scheme underscores how deeply the alleged manipulation affected Amazon's advertiser base.
Bipartisan State Support and Potential Penalties
More than 20 state attorneys general have signed on to support the FTC lawsuit, signaling broad bipartisan consensus on Amazon's alleged wrongdoing. IJR reports the case is expected to be filed in Seattle federal court, giving the lawsuit geographic advantage in Washington State, where Amazon is headquartered.
If successful, the lawsuit could result in multi-billion-dollar penalties and force Amazon to restructure its advertising platform. This marks the third major FTC antitrust action against Amazon in recent years, following cases against its marketplace practices and fulfillment policies. Market reaction to the FTC inquiry has included sharp stock declines for Amazon.
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