US Regulators Sue Amazon Over Hidden Ad Costs

The case is about how Amazon sells advertising space. When someone searches for a product, brands compete in an auction for the best positions. Amazon used a "second-price" auction, in which the winner should pay only slightly more than the next-highest offer. The lawsuit claims that Amazon quietly placed bids of its own, known as "soft reserve" bids, and pushed prices up without telling advertisers. The BBC reports that Sponsored Products advertisers paid their own full bid nearly 80% of the time. Amazon, the third-biggest digital advertising company after Google and Meta, calls the lawsuit "misguided". It says average winning bids for Sponsored Products search ads fell by half between 2019 and 2025.

Andrew Ferguson, the head of the FTC, said the extra costs were largely passed on to American shoppers as higher prices for food and other everyday goods. Amazon disagrees. A legal expert told the New York Post that regulators do not have to prove harm to shoppers to win. The states want the court to stop the practice, fine Amazon and repay advertisers. Amazon's share price closed 2.5% lower on Monday.