The Federal Trade Commission, together with attorneys general from 22 states, filed a lawsuit on Tuesday accusing Amazon.com, Inc. of running a covert program that overcharged advertisers for at least seven years and generated more than $20 billion in alleged illegal revenue.
Allegations and Evidence
The complaint states that, beginning in 2019, Amazon systematically inflated the prices it charged roughly 1.2 million advertising customers. The company is alleged to have manipulated the “auctions” that determine the cost of Sponsored Products, Sponsored Brands and Sponsored Display ads—advertising formats that appear alongside product results when shoppers search on the Amazon marketplace.
According to the filing, Amazon presented the auctions as competitive, leading advertisers to believe that market forces set the final price. In reality, the FTC says, Amazon overrode the genuine auction outcomes with higher, internally set prices, thereby increasing its own profit margins.
The FTC says it obtained internal documents and electronic messages that detail the hidden “surcharges” applied to ad placements. Those materials, gathered during an investigation that began in 2024, describe a process by which Amazon inserted additional fees into the auction results, effectively charging advertisers more than the market‑determined rate.
Based on the internal evidence, the agency estimates that the scheme has extracted “over $20 billion” from advertisers who were unaware of the extra charges. The complaint further asserts that the hidden surcharges were applied “almost every time a shopper clicks on an advertisement on the Amazon website,” creating what it describes as “billions of rigged auctions.”
State Coalition and Legal Action
The lawsuit was filed in the U.S. District Court for the Western District of Washington and is backed by a bipartisan coalition of state attorneys general from 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.
In its filing, the FTC argues that Amazon’s alleged conduct deprives advertisers of the benefits of competition and violates principles of fair and transparent dealing. The complaint contends that the concealed pricing scheme undermines the integrity of the advertising marketplace and harms businesses that rely on Amazon’s platform to reach consumers.While the case is newly filed, the involvement of a large multi‑state coalition underscores the seriousness with which state regulators view the alleged anti‑competitive behavior. The parties have not yet responded publicly to the allegations, and the lawsuit seeks injunctive relief and monetary damages on behalf of the affected advertisers.
If the claims are proven, the outcome could reshape how e‑commerce platforms conduct advertising auctions and enforce greater transparency in pricing mechanisms used across digital marketplaces.
Mitchell Landsberg is a Senior Technology Correspondent at News Raise. He covers consumer electronics, artificial intelligence, software developments, and digital privacy trends.
