Days after Meta agreed to a record settlement amount of USD 18 billion in a Californian court for the lapses of its Facebook and Instagram platforms that harmed American children, it is now Amazon.com’s turn to face the lawsuit.
In a plea filed in a federal court, the United States Federal Trade Commission (FTC) has accused the tech giant of illegally raising prices for advertisers by surreptitiously raising the minimum price required to place ads that promote their products.
The agency, joined by a bipartisan group of 22 US states, said Amazon systematically inflated auction prices for advertisers without their knowledge, costing them USD 20 billion or even more.
“Amazon has been able to generate billions of dollars in profits — at the expense of its auction advertising customers,” the FTC stated in its suit, filed in federal court in the Western District of Washington state.
The FTC alleged that “advertisers suffered billions of dollars in harm from higher ad prices, while the states could seek civil penalties and attempt to recover some of that money,” and made it clear that it would seek “tens of billions” in damages, although a precise amount has not yet been determined.
Amazon, through a blogpost, has denied the wrongdoing, saying its advertising policies aim to show shoppers the most relevant ads.
As per the tech giant, the average cost per click for advertisers remained flat from 2019 to 2024, while the sales generated from those clicks rose.
“Amazon’s approach to pricing contradicts any suggestion of consumer harm. We provide customers the lowest prices every day across the widest selection of products, and work to ensure our retail and grocery prices meet or beat those offered by other retailers,” the company remarked, while hitting back at the FTC’s allegations.
The suit centers on three types of advertisements that run alongside search results: sponsored products, brand and display ads.
FTC’s allegations cited the change in Amazon’s auction rules from 2019.
“Online ad auctions occur in fractions of a second typically after a search term is entered, with marketers’ computer systems bidding for the right to have their messaging appear. Amazon sometimes entered its bids in the auctions, ostensibly raising prices for others. As part of the scheme, it attempted to conceal those bids from the advertisers,” the regulatory body said.
Due to the higher cost of advertising, consumers paid higher prices for the companies’ goods on Amazon.
The FTC continued, “As much as 80% of sponsored product auctions experienced some form of intervention by Amazon.”
Amazon, in response, said it actually reduced costs for advertisers, saving them some USD 8 billion between 2021 and 2025.
“Average winning bids fell 50% from 2019 to 2025 on sponsored products search ads,” the tech giant wrote in its blog post.
Amazon has been aggressively boosting its advertising business and is now the world’s third largest digital ad company after Google and Meta. The company’s ad sales rose 26% in the Q2 2026 to USD 19.8 billion and 22% in all of 2025 to USD 68.6 billion.
The e-commerce giant in September 2025 agreed to pay USD 2.5 billion in fines and reimbursements Prime subscribers to settle the FTC’s allegations that it deceived its customers to generate subscriptions.
Now the tech giant faces the prospect of again appearing in court in 2027 to defend itself against another FTC suit.