The Federal Trade Commission and 22 authorities attorneys wide sued Amazon connected Monday, alleging the retailer secretly overcharged advertisers done changes to its advertizing auctions.
According to the FTC, Amazon changed really it wished prices without adequately disclosing those changes to advertisers. The agency estimates the believe generated much than $20 cardinal successful further advertizing costs.
Amazon disputes the allegations, arguing its auction changes improved advertisement capacity and yet saved advertisers money.
At the halfway of the lawsuit is simply a pricing system Amazon introduced successful 2019 called a “soft reserve price” and really Amazon explained it to advertisers.
What The FTC Is Alleging
Amazon had agelong described its advertizing auctions arsenic a shape of second-price auction, which isn’t unsocial to Amazon.
Digital advertizing platforms person wide utilized second-price auctions, and Google Search follows a akin wide principle. An advertiser sets a maximum bid but often pays little based connected the title and different auction factors.
Under Amazon’s accepted model, advertisers would likewise taxable the maximum magnitude they’re consenting to salary for a click, but the winning advertiser mostly paid only capable to hit the next-highest classed competitor.
The FTC alleges Amazon changed really it calculated that value opening successful 2019.
Amazon introduced what it calls a “soft reserve price,” which sets a minimum worth for an individual advertisement placement. According to the FTC, that reserve could summation the magnitude a winning advertiser paid moreover erstwhile different advertiser’s bid did not require a higher price.
The title alleges Amazon internally referred to the system arsenic an “invented auction participant” and utilized a “proxy 2nd price” to thief find the winning advertiser’s cost.
Why advertisers understood the auction to activity a definite measurement is cardinal to the FTC’s case.
If advertisers expect their maximum bid to service chiefly arsenic a ceiling, pinch title usually determining a little last CPC, that tin power really aggressively they bid.
The FTC argues Amazon continued giving advertisers that belief moreover arsenic much winning advertisers began paying their afloat bid.
According to the complaint, Sponsored Products advertisers paid their afloat bid astir 30% to 40% of the clip successful 2021. That accrued to 70% successful 2022 and astir 80% by 2024.
The FTC estimates the changes resulted successful much than $20 cardinal successful further advertizing costs.
Amazon does not conflict that soft reserve prices are portion of its auctions. It disputes the FTC’s characterization of really they activity and whether the believe harmed advertisers.
Amazon Says Advertisers Weren’t Overcharged
Amazon disputes some the FTC’s explanation of its auctions and its declare that advertisers were harmed.
In its response, Amazon says the FTC “fundamentally misunderstands really advertisers operate.”
Amazon acknowledges utilizing soft reserve prices but says they thief find the marketplace worth of individual advertisement placements. It besides argues reserve prices are communal wrong integer advertizing auctions.
Amazon says its auctions see some an advertiser’s bid and predicted relevance. If a winning bid exceeds some the difficult and soft reserve prices, the advertiser pays the soft reserve. If the bid clears the difficult reserve but falls beneath the soft reserve, the advertiser pays its bid.
In either case, Amazon says an advertiser ne'er pays much than its maximum bid.
Amazon besides points to its ain capacity information arsenic grounds that advertisers weren’t harmed. It says mean winning bids for Sponsored Products hunt ads fell 50% betwixt 2019 and 2025. Average CPC remained level from 2019 done 2024 aft adjusting for inflation, while conversion rates accrued 24% betwixt 2021 and 2025.
Amazon estimates its relevance-based auction exemplary saved advertisers much than $8 cardinal betwixt 2021 and 2025.
That doesn’t straight reply the FTC’s argument, though.
The FTC isn’t alleging advertisers paid much than their maximum bids. It’s arguing advertisers whitethorn person group those maximum bids otherwise if they understood really Amazon was determining the last price.
Amazon’s position is that advertisers don’t negociate bids based connected simplified descriptions of auction mechanics. They set based connected existent CPCs, conversions and return connected advertisement spend.
Whether Amazon adequately explained its auction mechanics is simply a cardinal portion of the dispute.
Other Ad Platforms Have Faced Similar Scrutiny
Amazon isn’t the only awesome advertizing level to look questions astir what it tells advertisers astir pricing and advertisement performance.
In 2025, the FTC began investigating some Amazon and Google complete their hunt advertizing practices. The investigation looked astatine whether the platforms adequately disclosed pricing and different terms, including whether they accrued advertisement costs without decently informing advertisers.
So far, the FTC has not revenge a comparable suit against Google.
Google has faced other ineligible challenges involving its advertisement auctions. In 2020, a Texas-led group of states sued Google complete its show advertizing business, alleging anticompetitive practices and deceptive representations astir really its advertisement auctions operated.
The Department of Justice brought a abstracted advertisement tech antitrust lawsuit successful 2023. A national judge ruled successful 2025 that Google illegally monopolized 2 markets involving patient advertisement servers and advertisement exchanges. That lawsuit focused connected title wrong Google’s open-web advertisement tech business alternatively than allegations that Google misled Google Ads customers astir CPC pricing.
Meta has faced a different type of advertiser lawsuit.
Advertisers sued Meta complete its “Potential Reach” metric, alleging Meta represented it arsenic an estimate of group erstwhile the metric really counted accounts. The advertisers reason those inflated estimates led them to bargain much ads and salary much than they different would have.
The Ninth Circuit allowed the advertiser damages people to move forward successful 2024. The Supreme Court declined Meta’s petition to reappraisal that determination successful January 2025.
The Meta lawsuit wasn’t brought by the FTC and doesn’t impact auction pricing. But it raises a akin rumor astir the accusation advertisers trust connected erstwhile deciding really overmuch to spend.
Amazon’s lawsuit puts that mobility straight connected the mechanics that find what advertisers pay.
What This Means For Advertisers
For now, Amazon advertisers should proceed managing their campaigns arsenic accustomed while the lawsuit moves done the courts.
Advertisers pinch important humanities walk whitethorn want to sphere run information from the play covered by the FTC’s allegations. That includes spend, bids, CPCs and different capacity information that could go applicable arsenic the lawsuit progresses.
The FTC is seeking monetary alleviation arsenic portion of the lawsuit, though it’s acold excessively early to cognize whether individual advertisers could person compensation aliases what that process mightiness look like.
Historical capacity information could besides springiness advertisers much discourse astir the periods covered by the FTC’s allegations. The agency claims Amazon accrued its advertizing surcharges during high-volume shopping periods, including Prime Day and Black Friday.
Advertisers should beryllium observant astir drafting conclusions from CPC trends alone. Higher CPCs during awesome shopping periods tin travel from accrued competition, seasonality and changes successful advertiser demand. Historical run information isn’t apt to show whether Amazon’s soft reserve value caused a peculiar CPC increase.
That limitation gets person to what makes this lawsuit applicable for advertisers.
Advertisers cognize the bid they submitted, the CPC Amazon charged and the capacity that followed. They person acold little accusation astir the calculations Amazon utilized to get from the bid to the last price.
That leaves advertisers mostly limited connected the level to accurately explicate really those calculations work.
The FTC’s lawsuit will trial whether Amazon provided capable accusation astir its auction mechanics and whether immoderate deficiency of disclosure caused advertisers to salary more.
What Happens Next
The suit is still successful its early stages, and Amazon has made clear it plans to conflict the FTC’s allegations.
The lawsuit could return years to resolve, particularly if either broadside appeals. In the meantime, the tribunal will person to see really Amazon represented its auction mechanics to advertisers and whether its usage of soft reserve prices violated user protection laws.
The result could besides supply much clarity astir what advertizing platforms request to disclose erstwhile changes to their auction systems impact pricing.
For Amazon advertisers, location isn’t overmuch to enactment connected yet beyond keeping humanities run and capacity information disposable arsenic the lawsuit moves forward.
We’ll proceed to travel the suit and update this article arsenic the lawsuit develops.
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