FTC sues Amazon over ad pricing practices

On August 31, 2026, the Federal Trade Commission filed a lawsuit accusing Amazon (AMZN) of "secretly and systematically overcharging" advertisers on its platform. The complaint was brought in the U.S. District Court for the Western District of Washington and was joined by attorneys general from multiple states, reported as 22. The case targets Amazon’s advertising business, which sells ad placements across its retail site and related services.

Regulators describe the action as a challenge to how ad prices have been set for years on one of the world’s largest online retail platforms. The suit focuses on the mechanics of Amazon’s advertising auctions and the pricing rules that advertisers relied on when bidding for visibility on the site.

The complaint centers on a change to Amazon’s auction rules that took effect in 2019. Regulators allege that this change introduced undisclosed "hidden surcharges," described in coverage as a "soft reserve," into the auction process. These surcharges allegedly increased the minimum price advertisers had to pay to win ad placements.

Rather than operating as a straightforward auction that reflected advertisers’ bids, the system is alleged to have incorporated internal pricing thresholds that were not clearly disclosed. Regulators say this effectively turned the nominal auction format into one that charged advertisers more often and at higher levels than they expected when bidding.

The FTC and state attorneys general assert that the alleged scheme spans roughly a seven-year period. Within that window, they focus in particular on conduct following the 2019 rule change. The practices at issue relate to advertisers seeking placements across Amazon’s retail platform.

Regulators state that the hidden surcharges may have generated more than $20 billion in revenue for Amazon from advertisers over the period. The figures cited in the filings and related descriptions characterize the impact as amounting to tens of billions of dollars extracted through the challenged pricing structure.

By targeting how ad prices were set, the lawsuit goes to the core of Amazon’s advertising auction model. The case raises questions about the transparency of the company’s pricing rules and the reliability of the auction mechanism that advertisers used to plan their spending.

The outcome of the litigation could affect how Amazon structures its ad auctions and discloses pricing elements to advertisers in the future. It may also influence broader regulatory scrutiny of digital advertising platforms that rely on complex, automated auction systems to allocate ad inventory and set prices.