The Federal Trade Commission has launched another major legal challenge against Amazon, alleging that the e-commerce giant secretly manipulated the pricing of its digital advertising auctions to increase revenue at the expense of advertisers.
According to the complaint, the alleged scheme began in 2018, when Jeff Bezos was still Amazon’s chief executive, and involved three of the company’s major advertising products: Sponsored Products, Sponsored Brands, and Sponsored Display.
The allegations add another significant legal battle to Amazon’s growing regulatory challenges and raise broader questions about transparency and competition in the rapidly expanding digital advertising market.
Alleged Manipulation of Advertising Auctions
The FTC alleges that Amazon intervened in its advertising auctions to artificially increase the minimum prices advertisers had to pay for clicks.
According to FTC officials, Amazon allegedly intervened in auctions 70% to 80% of the time in recent years. The Wall Street Journal reported that the strategy could increase pay-per-click advertising costs by approximately 50% on major shopping days.
The complaint further alleges that Amazon did not notify advertisers about the changes and actively took steps to conceal the practice.
The FTC claims the conduct affected approximately 500,000 small and medium-sized businesses that relied on Amazon’s advertising infrastructure to reach customers.
Black Friday Allegations
The complaint points to Amazon’s crucial Black Friday period in 2024 as one example of the alleged strategy.
According to the lawsuit, an Amazon executive discussed increasing reserve prices immediately after Sponsored Products advertising revenue came in below the company’s financial target.
The allegations suggest that Amazon’s advertising system was not simply responding to market conditions but was allegedly being adjusted internally to meet revenue objectives.
If proven, such practices could raise significant questions about whether advertisers were receiving an accurate understanding of how Amazon’s advertising auctions operated.
Amazon Strongly Rejects the Claims
Amazon has denied wrongdoing and strongly criticized the FTC’s allegations.
The company argued that its advertising practices did not harm consumers and maintained that it properly disclosed how its auctions operate.
Amazon also said its advertising technology has evolved to help businesses attract customers more effectively and increase sales, which in turn enhances the value of its advertising services.
In a statement Monday, Amazon criticized the FTC’s interpretation of the evidence, saying the regulator had reviewed approximately 1.5 million pages covering six years but was relying on a small number of communications to construct its case.
Amazon called the allegations “patently false.”
Who Was Actually Harmed?
A central issue in the case could be the FTC’s characterization of the alleged harm.
Amazon’s initial response emphasized that consumers were not affected by the alleged advertising practices. However, antitrust experts noted that the regulator’s case focuses primarily on advertisers rather than shoppers.
Rebecca Haw Allensworth, a Vanderbilt University law professor specializing in antitrust, told The Post that consumer harm is not necessarily required for the FTC to prevail.
According to Allensworth, Amazon could instead need to demonstrate that it did not falsely characterize how its advertising auctions operated—or that any misrepresentation did not influence advertisers’ bidding decisions.
That distinction could become critical as the legal proceedings develop.
Another Major Regulatory Challenge for Amazon
The FTC’s lawsuit represents another legal challenge for Amazon from U.S. regulators.
The Federal Trade Commission has increasingly scrutinized the business practices of major technology companies, particularly their control over digital marketplaces and advertising ecosystems.
The case also arrives amid broader regulatory pressure on the digital advertising industry.
Last year, similar antitrust allegations were brought against Google, with a federal judge finding the technology company to be a monopolist in a related case.
The increasing number of cases demonstrates the U.S. government’s growing willingness to challenge the business models of dominant technology platforms.
Coalition Building Could Strengthen the FTC’s Case
The FTC is also benefiting from broader cooperation among state authorities, according to former FTC Chairman William Kovacic, now director of the Competition Law Center at George Washington University.
Kovacic suggested that having a diverse group of states involved can strengthen the regulator’s position by creating a broader coalition around competition concerns.
Such coordination could become increasingly important as regulators attempt to address the influence of major technology companies across multiple markets.
Amazon Shares Fall
Investors responded cautiously to the latest legal development.
Amazon shares were down approximately 3% to around $259 on Monday afternoon as markets assessed the potential implications of the lawsuit.
While the immediate stock reaction was relatively limited compared with Amazon’s overall market value, the case introduces another source of regulatory uncertainty for the company.
A Larger Question About Digital Advertising
At the heart of the dispute is a fundamental question about transparency in online advertising.
Digital advertising auctions are increasingly sophisticated, with algorithms determining how much advertisers pay and where their ads appear. For businesses—particularly smaller companies—understanding how those systems operate can be essential to making effective marketing decisions.
The FTC’s allegations suggest that Amazon may have used its control over the auction infrastructure to influence pricing in ways advertisers did not fully understand.
Amazon, meanwhile, insists that its advertising technology is transparent, competitive, and designed to create greater value for businesses.
The outcome of the case could therefore extend beyond Amazon itself, potentially influencing how digital advertising auctions are designed, disclosed, and regulated across the technology industry.
For Amazon, the challenge is now to convince regulators and the courts that its advertising system operates as disclosed. For the FTC, the task will be to prove that Amazon deliberately manipulated the system in a way that deceived advertisers.
The case could ultimately become another defining test of how U.S. competition law applies to the increasingly powerful digital platforms that shape modern commerce.
