Amazon has been sued by federal regulators and 22 states in a Seattle court for allegedly manipulating advertising auctions to overcharge sellers.
The Federal Trade Commission and state attorneys general filed the complaint on Monday in the U.S. District Court in Seattle, Washington, where the e-commerce giant is headquartered. According to the lawsuit, Amazon secretly and systematically overcharged 1.2 million advertisers, including more than 500,000 small and medium-sized businesses, generating an estimated 20 billion dollars in extra revenue since 2019.
Allegations of Ad Auction Manipulation
The legal action targets Amazon's second-price auction system for sponsored product displays, which elevate items in search results. In a standard second-price auction, the winning bidder does not pay the amount of their initial bid, but rather one cent more than the second-highest competing offer.
According to the complaint, Amazon began inserting non-existent phantom competitors into auctions at the end of 2018 to artificially inflate final settlement prices. Regulators state that the company expanded this practice in July 2019. Internal documents cited in the lawsuit show that the vice president in charge of the advertising division acknowledged inserting auctions to push prices beyond what natural competition among advertisers would generate.
California Attorney General Rob Bonta stated during a press conference that Amazon had manipulated thousands of advertising auctions. Amazon rejected the allegations, asserting that no advertiser pays more than the price won in an auction and stating that the lawsuit fails to show any price increases for consumers.
Advertising Revenues and Market Share
Sponsored product displays represent a major portion of Amazon's advertising business, which brought in 68.6 billion dollars in 2025. Based in Seattle, Washington, Amazon operates one of the largest online marketplaces in the world and is the third-largest seller of digital advertising globally, behind Meta and Google.
The filing marks the third FTC lawsuit brought against Amazon, whose corporate market capitalization passed three trillion dollars for the first time in early August. In September 2025, the company agreed to pay 2.5 billion dollars to resolve an earlier FTC lawsuit involving Prime subscription practices. A separate monopoly lawsuit targeting Amazon's core commerce practices could force a restructuring of the company, with trial set for March 29, 2027.
Broader Big Tech Antitrust Scrutiny
The new action reflects broader regulatory pressure on major American technology conglomerates, which has continued across both Republican and Democratic presidential administrations. In a separate digital ad market ruling in 2025, a federal judge determined that Google holds an illegal monopoly over website advertising markets, with court-ordered remedies still pending.
The source publication also noted related international developments, including statements by Brazilian President Luiz Inacio Lula da Silva calling Amazon oil discoveries a passport to the future, and estimates from Kyiv citing over one billion euros in damages from attacks on major retail infrastructure.
