The Federal Trade Commission and a bipartisan coalition of 22 state attorneys general sued Amazon on August 31, 2026, alleging the e-commerce giant manipulated its advertising auction system. Regulators claim Amazon used deceptive "shill" bids to secretly inflate prices, extracting over $20 billion from 1.2 million advertisers since 2019. Amazon strongly denies the allegations, calling the lawsuit misguided and asserting that its average cost per click remained flat while saving advertisers billions.
FTC lawsuit against Amazon
- ▪The Federal Trade Commission lawsuit targets three types of advertisements that run alongside search results on Amazon.com: sponsored products, brand ads, and display ads.
- ▪The Federal Trade Commission lawsuit alleges that Amazon.com systematically inflated auction prices for advertisers without their knowledge, starting with auction rule changes in 2018 and 2019.
- ▪The Federal Trade Commission filed a lawsuit against Amazon.com on August 31, 2026, in the Western District of Washington state, alleging the company manipulated advertising prices.
Auction price manipulation allegations
- ▪The Federal Trade Commission lawsuit alleges that Amazon.com intervened in up to 80% of sponsored product ad auctions to artificially raise prices.
- ▪The Federal Trade Commission alleges that Amazon.com manipulated its second-price auction system by entering its own "shill" bids to secretly raise the second-highest bids.
- ▪An internal Amazon.com document cited in the lawsuit shows a manager describing the pricing strategy as "hoping that advertisers don’t notice and decrease bids or ad spend."
Twenty billion dollar overcharges
- ▪The Federal Trade Commission and state attorneys general are seeking civil penalties, restitution, and a court order to bar Amazon.com from continuing the allegedly deceptive practices.
- ▪The Federal Trade Commission alleges that Amazon.com's advertising practices illegally extracted over $20 billion from approximately 1.2 million advertising customers since 2019.
- ▪The Federal Trade Commission alleges that the overcharged advertising base included more than 500,000 small and medium-sized businesses, with costs ultimately passed to consumers.
Amazon denial of wrongdoing
- ▪Amazon.com stated that its average cost per click remained flat from 2019 to 2024, and that its ad relevancy policies saved advertisers over $8 billion from 2021 to 2025.
- ▪Amazon.com denied the allegations in an August 31, 2026 blog post, calling the Federal Trade Commission's lawsuit "misguided" and its claims "patently false."
- ▪Amazon.com argued that advertisers adjust their bids based on real-world performance rather than descriptions of auction mechanics, meaning the Federal Trade Commission's premise is flawed.
Twenty-two state coalition
- ▪The 22 state attorneys general participating in the lawsuit against Amazon.com represent a bipartisan mix of 11 Republicans and 10 Democrats.
- ▪A bipartisan coalition of 22 U.S. states joined the Federal Trade Commission in filing the lawsuit against Amazon.com in federal court.
- ▪The state coalition joining the Federal Trade Commission lawsuit includes attorneys general from California, Florida, New York, North Carolina, and Pennsylvania.
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