FTC Sues Amazon Over Manipulated Ad Auctions
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According to Golem, the US competition authority FTC is accusing Amazon of massive fraud in advertising auctions. Over seven years, the company allegedly drove up the prices for ad placements in secret, likely earning tens of billions of dollars in the process. 22 US states are joining the lawsuit. FTC chief Andrew Ferguson makes it clear: “These higher costs were largely passed on to American consumers.” Amazon’s stock reacted with a drop of around 2.5 percent on August 31, 2026.
Amazon Allegedly Broke Its Own Rules
When one of the world’s largest online retailers engages in unfair practices, the consequences can be devastating, Ferguson warns. Amazon has not yet responded to the allegations. The lawsuit targets a system in which companies bid for ad placements in specific search results. Whoever pays the most gets the spot.
The principle sounds fair: the highest bidder does not pay their full bid, but only one cent more than the runner-up. If Company A bids $200 and Company B bids $190, A only pays $190.01. This system is meant to prevent inflated bids and guarantee fair prices.
But according to the FTC, Amazon collected the full bid from the top bidder in nearly four out of five cases for product advertising. The company thereby violated its own rules and systematically collected more money than intended.
FTC Suspects a “Hidden Markup”
The FTC bases its allegations on internal company documents that reference a “hidden markup.” In addition, Amazon allegedly drove up prices itself using fictitious auction participants. The manipulation reportedly stemmed from a simple reason: the company was dissatisfied with its revenue from the ad auctions.
The lawsuit illustrates how tech giants can exploit their market power. Amazon controls not only the platform but also the rules — rules that, according to the lawsuit, the company broke at will to boost its own revenues. The legal consequences could be substantial.
