US lawsuit alleges Amazon rigged ad prices in $20bn ‘surplus’ scheme

The US Federal Trade Commission (FTC) and a bipartisan coalition of 22 states have filed a major antitrust lawsuit against Amazon, accusing the retail giant of systematically overcharging more than a million advertising customers.

According to the complaint filed in Washington state, Amazon manipulated its online advertising auctions to secretly inflate prices, generating an estimated $20 billion (£14.8 billion) in illicit revenue since 2019.

Regulators allege that the tech titan interfered with “second-price auctions” – where winners typically pay just slightly more than the second-highest bid – by overriding results and charging advertisers closer to their maximum bids nearly 80% of the time.

The FTC argues that the ad-rigging scheme impacted over 1.2 million advertisers, including more than 500,000 small and medium-sized businesses. Regulators warn that these hidden surcharges inevitably drove up operational costs for brands, which were then passed on to everyday shoppers in the form of higher prices on retail goods.

“Amazon secretly and systematically overcharged advertisers,” said FTC Chair Andrew Ferguson, criticizing the company for misleading businesses that rely on its platform to sell products.

Amazon has strongly pushed back against the allegations, calling the lawsuit “misguided” and asserting that the regulator fundamentally misunderstands how digital advertising mechanics and bidding strategies operate.

The company noted that average winning bids on its Sponsored Products ads fell significantly between 2019 and 2025, and defended its commitment to providing consumers with low prices. Following the announcement, Amazon’s shares dipped 2.5%.

The legal challenge marks the latest clash between the e-commerce giant and US watchdogs, following a massive $2.5 billion settlement last year over Amazon’s Prime subscription cancellation practices. Legal experts anticipate a prolonged courtroom battle over the transparency and integrity of online ad marketplaces.