Developing
These are allegations in a complaint. Amazon disputes them and calls the lawsuit misguided.
In 60 seconds
- On August 31, 2026 the FTC and 22 states sued Amazon in the Western District of Washington over its sponsored-ads auctions.
- The complaint alleges Amazon added undisclosed "soft reserve price" surcharges from 2019 while describing the auctions as genuine second-price competitions.
- It says Sponsored Products advertisers paid their own bid about 80% of the time by 2024, and that the practice took tens of billions of dollars from more than a million brands and sellers.
- Amazon disputes the allegations.
Impact Layer
- What changed
- Regulators challenged how the largest retail media auction sets prices.
- Why it matters
- If the claims hold, advertisers' reported costs and return on ad spend on Amazon were overstated by the price mechanics, which affects every budget decision built on them.
- Who is affected
- Amazon advertisers, agencies and retail media teams, and other platforms that run second-price auctions.
- Martech stack area
- Advertising, Commerce
- Stack impact
- Nothing changes in the tools today. Teams can review historical cost-per-click trends and ask their Amazon rep how auction prices are set.
- Business impact
- High Allegations only. The FTC page we read did not give Amazon's response, which comes from news coverage, and no relief sought was stated.
- Related technologies
- What to watch
- Amazon's formal answer, the relief requested, and whether private advertiser suits follow.
On August 31, 2026, the Federal Trade Commission and 22 state attorneys general filed suit against Amazon in the US District Court for the Western District of Washington. The Commission authorized the filing 2-0.
What the complaint alleges
- Amazon added hidden “soft reserve price” surcharges to its generalized second-price auctions while publicly presenting them as genuine second-price competitions. Internally, the FTC says, Amazon referred to “invented auction participants” and “proxy 2nd price” bids.
- The practice began in 2019 and ran for more than seven years.
- Sponsored Products advertisers paid their own winning bid about 80% of the time by 2024, compared with 30 to 40% in 2021 and about 70% in 2022.
- The scheme took “tens of billions of dollars” from more than one million brands and sellers, including 500,000 small and medium-sized businesses. News coverage cites an estimate of more than $20 billion.
Amazon has disputed the allegations, calling the suit misguided and saying the FTC “fundamentally misunderstands” how its advertising system works, according to coverage of the filing.
Our read
A second-price auction is meant to charge the winner a cent above the runner-up. If a platform raises the price without saying so, advertisers cannot judge their real cost of a click. These are allegations, and Amazon will answer them in court. For now, advertisers should keep their own record of cost per click over time and ask Amazon in writing how reserve prices are applied. The FTC page did not state what relief it seeks.
Sources
- FTC: FTC and states sue Amazon over secret ad surcharge scheme (opens in a new tab)
Source of the court, mechanism, share of auctions, scale and the 2-0 Commission vote.
- CBS News: FTC and 22 states sue Amazon over alleged secret ad surcharge scheme (opens in a new tab)
Cited in the search results for the $20 billion estimate and Amazon's response. Not read directly.