- Date
- August 31, 2026
- Kind
- Regulatory change
- Significance
- High
On August 31, 2026, the Federal Trade Commission and the attorneys general of 22 states sued Amazon in the US District Court for the Western District of Washington. The Commission voted 2-0 to authorize the complaint. These are allegations; Amazon will answer them in court.
What the FTC alleges
- Amazon ran search advertising auctions for Sponsored Products, Sponsored Brands and Display Ads while telling advertisers they were “second price” auctions, but added undisclosed surcharges.
- Beginning in 2019 it allegedly changed its auction rules without notice, adding a hidden “soft reserve price”. Internal documents allegedly refer to a “proxy 2nd price” and an “invented auction participant”, which the complaint calls effectively shill bids.
- The conduct allegedly lasted more than seven years and affected more than one million brands and sellers, including more than 500,000 small and medium-sized businesses. The FTC says it likely extracted tens of billions of dollars.
- The share of Sponsored Products advertisers paying their own winning bid allegedly rose from 30% to 40% in 2021, to 70% in 2022 and to about 80% in 2024.
FTC Chairman Andrew N. Ferguson said: “When one of the world’s largest online retailers engages in unfair and deceptive conduct, the impact can be staggering.”
Amazon’s response and the relief sought
CBS News reports that Amazon said the FTC’s claim “fundamentally misunderstands how advertisers operate” and that, by its own estimate, advertisers saved more than $8 billion from 2021 to 2025. The FTC’s release does not state the relief sought; CBS reports that New York Attorney General Letitia James said the plaintiffs want an order barring the alleged scheme, penalties and restitution.
Why it matters
In a second-price auction the winner is meant to pay a cent more than the runner-up. If a platform raises the price without saying so, advertisers cannot judge the real cost of a click. Whatever the court decides, advertisers can keep their own record of cost per click over time and ask Amazon in writing how reserve prices are applied.
What happened next
The case had just been filed in the sources reviewed, so there was no ruling. The FTC lists its complaint on its press release page.