FTC and 22 States Reveal Unredacted Details in Amazon Ad Pricing Lawsuit
The Federal Trade Commission and 22 state attorneys general released previously hidden details from their lawsuit against Amazon. Originally filed in August in the Western District of Washington, the lawsuit alleges that Amazon secretly inflated search advertising prices for businesses using its platform. The newly unredacted filing claims Amazon raised ad prices by up to 50% above auction results on regular days and up to 250% during major shopping events like Prime Day and Black Friday. During the 2022 holiday shopping season alone, these hidden surcharges reportedly generated $87 million in worldwide revenue for the company. When advertisers noticed the rising costs and asked if the auction rules had changed, Amazon staff falsely blamed increased market competition. Everyday shoppers and online sellers care about these practices because hidden ad fees drive up operational costs for merchants, which can ultimately lead to higher retail prices across online marketplaces.
What was announced
The Federal Trade Commission and 22 states filed an updated complaint in the Western District of Washington, making public previously redacted details about Amazon's advertising practices. The original lawsuit was filed in August.
According to the unsealed document, Amazon secretly increased search advertising fees above standard auction outcomes. The filing alleges that Amazon added hidden surcharges of up to 50% on ordinary days and up to 250% during peak events like Prime Day or Black Friday.
Specific allegations in the complaint include:
- During the 2021 holiday season, average cost-per-click rates rose by 20%, with some advertisers seeing spikes over 200%.
- In the 2022 holiday shopping season, Amazon raised $87 million in worldwide revenue through secret surcharges.
- In 2023, Amazon executives sought an extra $40 million to meet financial targets, prompting an advertising executive to discuss using reserves.
- One large food and beverage advertiser faced price increases of over 100% during Prime Day in 2023, which internal Amazon notes acknowledged destroyed campaign performance.
When advertisers questioned whether the second-price auction process had changed, Amazon account managers falsely attributed the price spikes to marketplace competition.
What it means
This filing details how Amazon allegedly managed its online advertising platform. Second-price auctions normally charge the winning bidder slightly more than the second-place bid. The FTC alleges Amazon bypassed this rule by adding hidden surcharges to reach internal corporate targets. Both small businesses and large corporations paid these inflated rates. Higher advertising costs reduce merchant profit margins, which may lead sellers to increase prices for consumer products.
What the announcement does not tell us
The FTC press release does not state when the court will hear the lawsuit or what specific remedies and financial penalties the government is seeking. It does not explain how Amazon responded to these specific claims in court. Additionally, the document does not mention whether Amazon has changed its auction practices since the suit began, nor does it state the total number of advertisers impacted by the surcharges.
How this was written
This analysis was written with AI from the official announcement below, using only facts that announcement states. The quoted wording is US FTC Press Releases’s own. Always check the original before acting on anything here.
Newly unredacted material sheds light on Amazon’s alleged scheme to manipulate auction results to meet corporate financial targets The Federal Trade Commission and 22 states recently filed an updated version of their complaint against Amazon with unredacted details about Amazon’s alleged use of deceptive and unfair practices to secretly inflate prices in its online search advertising auction. View Press Release
Opens www.ftc.gov
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