The FTC Alleges Amazon Charged Advertisers Inaccurate Prices 80% of the Time
The US Federal Trade Commission (FTC) claims that Amazon charged advertisers the wrong price roughly 80% of the time in its search ads, according to a lawsuit filed on Monday.
Amazon runs a second-price auction for these ads, promising that the winning advertiser will pay one cent more than the next-highest bid. However, the FTC alleges that Amazon consistently charged advertisers their full winning bid, deviating from the agreed-upon mechanism.
This case, first reported by the Wall Street Journal, involves seven years of advertising activity spanning over a million brands and sellers. The lawsuit was brought by the FTC and 22 states against Amazon.
The significance lies in the difference between the described auction system and its actual implementation. A second-price auction is not just a bidding mechanism; it guarantees advertisers how their bids will translate into prices they ultimately pay. Amazon’s alleged deviation from these rules could have substantial implications for both advertisers and consumers.
Amazon, however, disputes this interpretation, arguing that advertisers adjust their bids based on performance rather than adhering strictly to auction mechanics. They also highlight the purported benefits of their system, stating it saved advertisers over $8 billion between 2021 and 2025.
The scale of Amazon’s advertising business is immense, generating $68.6 billion in 2025, making them one of the world’s top three digital advertising platforms alongside Google and Meta. The allegations against Amazon could have significant financial consequences, especially considering their dominant position in online retail.