US regulator, 22 states accuse Amazon of ‘manipulating’ ad auctions: Lawsuit

Federal Trade Commission (FTC) and 22 states sued Amazon on Monday for allegedly "manipulating" online auctions for digital advertising, resulting in more than $20 billion in overcharges for 1.2 million customers. US regulator, 22 states accuse Amazon of 'manipulating' ad auctions: Lawsuit. September 1, 2026 US regulator, 22 states accuse Amazon of 'manipulating' ad auctions: Lawsuit by Sara BLOOMBERG edited by Andrew Zinin Andrew Zinin Chief Editor Meet our editorial team Behind our editorial process Editors' notes This article has been reviewed according to Science X's editorial process and policies.

Editors have highlighted the following attributes while ensuring the content's credibility: fact-checked reputable news agency proofread The GIST Add as preferred source The US Federal Trade Commission and 22 states have sued Amazon for allegedly overcharging customers for digital advertising. Amazon "has secretly and systematically overcharged its about 1.2 million advertising customers by manipulating the 'auctions' that it uses to set the price of ads on its platform," says the complaint, filed in federal court in Washington state. In a blog post, Amazon called the lawsuit "misguided" and "flawed" and said regulators "cherry-picked" outdated internal documents.

California Attorney General Rob Bonta told reporters on Monday that Amazon "has rigged billions of ad auctions." California is one of the states suing alongside the FTC. The complaint cites three separate advertising products at issue: Sponsored Products, Sponsored Brands and Sponsored Display. "Based on many internal documents describing its 'hidden' 'surcharges,' Amazon's scheme has likely illegally extracted over $20 billion from its unwitting advertising customers," the complaint says.

The company's "deception continues to this day," the lawsuit says. Amazon is sued by the FTC and 22 states for 'secretly' overcharging advertisers since 2019.

Amazon is facing a new lawsuit from the FTC and 22 states for allegedly secretly charging businesses more for advertising. FTC accuses Amazon of running a ‘secret ad surcharge scheme’ in new lawsuit.

Big Tech Amazon Amazon is sued by the FTC and 22 states for 'secretly' overcharging advertisers since 2019 The company's "deception continues to this day," the lawsuit says. The company has made billions of dollars by "secretly" inflating its rates for more than six years, according to a statement from the FTC.

The lawsuit, filed Monday, claims Amazon spent more than seven years quietly increasing the prices advertisers paid through its online ad auctions. According to the complaint, the alleged practice affected more than 1 million brands and sellers and may have generated tens of billions of dollars in additional revenue for Amazon.

The regulator alleges that Amazon for years deceived its advertisers by adding "hidden" surcharges to its ad auctions, which resulted in ad buyers unknowingly overpaying for sponsored product placements and other ads on Amazon's platform. The lawsuit alleges that the practice was well-known within the retail giant, even after "multiple" employees raised the issue.

The 22 states joining the FTC are Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont, and Washington. The lawsuit centers on Amazon’s Sponsored Products ads, Sponsored Brands ads, and Display ads that run alongside its search results.

"Amazon has been able to successfully impose hidden surcharges on advertisers almost every time a shopper clicks on an advertisement on the Amazon website," the lawsuit states. The tactic, which "continues to this day," according to the FTC, has been lucrative for the company.

According to the FTC, Amazon told more than 500,000 small and medium-sized businesses that it ran a “second-price” auction where the winning advertiser would pay just one cent more than the next-highest bid, rather than the full amount of their own bid. Because businesses believed they’d only ever pay slightly more than the runner-up, they had an incentive to bid high, trusting the system would keep their actual costs in check.

The "scheme has likely illegally extracted over 20 billion dollars from its unwitting advertising customers," the lawsuit alleges. Some details from the lawsuit have been redacted, but it quotes from several internal documents in which Amazon employees would seem to question the company's handling of auction pricing.

But the FTC alleges that starting in 2019, Amazon made a “surreptitious” change without telling advertisers. It added a hidden surcharge that Amazon internally called a “soft reserve price,” and used what one internal document called an “invented auction participant” — a fake bidder, basically — to push prices higher than true competition would have produced.