US FTC and 22 states sue Amazon over alleged ad pricing manipulation

The US Federal Trade Commission (FTC) and a bipartisan group of 22 states filed a lawsuit on Monday in Washington state, alleging that Amazon secretly overcharged more than a million advertising customers by manipulating online auctions used to set ad prices. The complaint claims Amazon overrode actual auction results with higher prices to increase profits, likely netting $20bn since 2019. The FTC and states argue that consumers were also harmed as extra costs were passed on. Amazon responded, saying it 'strongly disagrees' and that the FTC 'misunderstands' the ad market. Amazon's shares fell 2.5% on Monday. The lawsuit focuses on Amazon's Sponsored Products and Sponsored Brands ads, where advertisers expect to pay one cent more than the next highest bidder in 'second price' auctions, but Amazon allegedly charged winning bids close to 80% of the time. Amazon countered that average winning bids fell 50% from 2019 to 2025 and that 92% of placed ads are not given to the highest bid. This is not the first FTC action against Amazon; last year Amazon settled a case over Prime subscriptions for $2.5bn.