The Federal Trade Commission and twenty two state attorneys general have filed a major lawsuit against Amazon, alleging that the e commerce giant secretly manipulated its advertising system to overcharge businesses. At the heart of the legal battle is Amazon’s use of second price auctions, where the winning bidder is traditionally expected to pay just one cent more than the runner up. Instead, federal regulators claim Amazon abandoned this model starting in 2019, replacing real market bids with calculated proxy prices designed specifically to inflate costs and boost company profits.
According to the complaint, this systematic manipulation may have illegally drained more than 20 billion dollars from unsuspecting advertisers who believed they were participating in a fair bidding process. FTC Chairman Andrew Ferguson warned that these hidden surcharges did not just hurt business owners but were ultimately passed down to American shoppers through higher retail prices. This latest legal headache follows closely on the heels of another massive settlement, in which Amazon paid 2.5 billion dollars last year regarding its Prime subscription practices.
Amazon has pushed back strongly against the allegations, describing the lawsuit as misguided and fundamentally flawed. In a public response, the company argued that the FTC does not understand how advertiser behavior actually works and pointed to data suggesting that average winning bids for sponsored products actually dropped by half between 2019 and 2024. The company continues to dispute any claim that its internal pricing mechanisms led to increased costs for consumers across its platform.