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The US Federal Trade Commission (FTC) and 22 states have sued Amazon over its pricing in advertising auctions. The plaintiffs accuse the company of using hidden surcharges for years and of misleading advertisers about how its Sponsored Ads auctions work. Amazon rejects the allegations.
FTC speaks of hidden surcharges
The lawsuit focuses, among other things, on Sponsored Products, Sponsored Brands and Display Ads on Amazon. According to the FTC, Amazon told advertisers that ad placements are awarded through a so-called second-price model. In that model, the winner generally does not pay its maximum bid, but only the amount needed to outbid the next-highest bid.
The agency alleges that from 2019 Amazon introduced, without adequate disclosure, a surcharge that it internally called a "soft reserve price." As a result, advertisers sometimes paid significantly more than the actual auction competition would have produced. The FTC refers to more than one million affected brands and sellers, including more than 500.000 small and medium-sized businesses, and estimates revenues of several tens of billions of US dollars from the contested system.
According to the FTC, for Sponsored Products the share of auctions in which winners paid their own bid amount rose from about 30 to 40 percent in 2021 to around 80 percent in 2024. The agency also claims Amazon gradually increased the surcharges ahead of high-revenue days to make the change less noticeable. These allegations have not yet been established by a court.
Of particular relevance to performance marketers is the allegation that an opaque auction mechanism also changes bidding strategy. Anyone who assumes a genuine second-price system can set higher maximum bids than in a first-price auction, where the winner pays its own bid.
Amazon disputes the account
Amazon calls the lawsuit misguided and denies harming both consumers and advertisers. The company argues that the average cost-per-click for Sponsored Products remained stable between 2019 and 2024 after adjusting for inflation. At the same time, it says conversion rates rose by 24 percent from 2021 to 2025.
Amazon also emphasises that 2024 around 92 percent of served Sponsored Products ads did not go to the highest bid, because relevance is factored into placement alongside the bid. The company counters that advertisers adjust their bids based on actual performance rather than on an abstract description of the auction mechanics.
Media buyers so far react calmly
A new analysis by Digiday from 8 September 2026 suggests the lawsuit has so far not triggered hectic reactions at media agencies. Several agency executives interviewed by Digiday describe dealing with opaque auction mechanics rather as a problem the digital advertising market has long grown used to.
One agency representative told Digiday that, with the independent DSPs his company works with, in around 70 percent of cases no auction type information is passed on, even at log level. This is not an industry-wide statistic but the observation of a single market participant. It does, however, illustrate why the Amazon case matters beyond Amazon: advertisers increasingly optimise for conversion signals, creative performance and actual campaign results, while the exact mechanics behind automated auctions often remain hard to trace.
The allegations now raised are the subject of ongoing court proceedings and have not yet been established by a court. The case thus differs from the separate Google ad tech antitrust case, in which a court has already found anticompetitive conduct and is now deciding on remedies.
For media buyers, the Amazon case mainly shows how important traceable attribution and auction data are. Our current analysis of Snapchat's Unified Attribution fits this theme as well. On social media, transparency obligations also play a bigger role, for example with LinkedIn search for brand content.