Federal Regulators Sue Amazon Over Alleged Ad Auction Manipulation

Federal regulators sued Amazon on Monday, alleging the company has pocketed tens of billions of dollars by "secretly and systemically overcharging" advertisers on its platform.

A bipartisan group of 22 state attorneys general joined the Federal Trade Commission's lawsuit, which was filed in the U.S. District Court in Washington and marks the third major lawsuit against Amazon by federal regulators.

The latest complaint alleges that Amazon secretly pushed up the prices that 1.2 million brands and sellers pay to place ads on Amazon's website and mobile app by manipulating the bidding process. Amazon, which has grown into one of the world's largest advertising platforms, sells its ads through special auctions, which are fairly common in the industry.

"In executing its scheme to misrepresent and rig its auctions against its customers, Amazon has deceived its customers and deprived them of the benefits of competition and fair and transparent dealing," the government's lawsuit argues.

Amazon, in its response on Monday, argues that the FTC misrepresented the reality of its ad auctions and cherry-picked findings. The company says the quality of its advertising improved over the years while the average cost-per-click of its ads remained flat when adjusted for inflation. It also notes the lawsuit offers no evidence of harm to shoppers.

Amazon has faced other federal lawsuits

The FTC's case comes just over a year since Amazon agreed to pay a historic $2.5 billion settlement to resolve another federal lawsuit over its Prime membership program. The U.S. government had alleged the company's web designs manipulated tens of millions of people into paying for subscriptions that were purposefully hard to cancel.

Amazon also faces another sweeping lawsuit by the FTC and 17 states that paints the company as a monopolist that suffocates competitors and raises costs for both sellers and shoppers. This case is slated to go to trial early next year.

In 2023, Amazon also paid $30 million to settle FTC's allegations of privacy violations involving its voice assistant Alexa and doorbell camera Ring.

Amazon's advertising business has been growing quickly and steadily, up by 26% in the latest quarter. Over 2025, advertising earned the company almost $69 billion.