The US Federal Trade Commission and attorneys general from 22 states filed a sweeping lawsuit against Amazon on August 31, 2026, alleging the e-commerce giant secretly manipulated its advertising auction system to overcharge more than a million advertisers — netting an estimated $20 billion since 2019.
The complaint, filed in Washington state — Amazon's home state — accuses the company of secretly overriding the results of its so-called "second-price" auctions. In a standard second-price auction, advertisers expect to pay one cent more than the next highest bidder. But the lawsuit alleges Amazon charged advertisers their own winning bid close to 80% of the time, effectively inflating prices well above what the auction format promised.
"Amazon overrides and replaces the actual auction results with higher prices set by Amazon to increase its profits," the complaint states. The lawsuit claims Amazon was motivated because "it was unhappy about how much revenue its advertising auctions were generating."
The FTC and states argue the extra costs were ultimately passed on to consumers through higher product prices. "Consumers are suffering, have suffered, and will continue to suffer substantial injury as a result," the complaint states.
Amazon strongly denied the allegations. In a statement to the BBC, the company said it "strongly disagrees" with the premise that it misled advertisers and called the suit "misguided." Amazon argued that the FTC "fundamentally misunderstands how advertisers operate" and noted that average winning bids fell 50% from 2019 to 2025 on Sponsored Products search ads.
Amazon's shares fell 2.5% following the announcement.
The lawsuit is the third major FTC action against Amazon. In September 2025, Amazon agreed to pay $2.5 billion to settle allegations it enrolled millions of consumers in Prime without consent and made cancellation deliberately difficult. The new complaint represents the most significant antitrust action against Amazon's advertising business, which has become a major revenue driver for the company.
The case is expected to be closely watched as a test of the FTC's ability to regulate the advertising practices of Big Tech platforms under the agency's expanded enforcement mandate.
