FTC's updated complaint alleges Amazon raised ad prices as much as 250% above auction results

The Federal Trade Commission has made public more of its case against Amazon's advertising business. The agency said on November 5, 2026, that it and 22 states recently filed an updated complaint containing details that had been redacted when they sued on August 31. The court stamp on the new version reads October 28. Its newly visible passages put the alleged hidden increases at up to 50% above auction results on an ordinary day and up to 250% on major shopping days such as Prime Day or Black Friday.

These are allegations. Amazon called the case a “misguided lawsuit” on the day it was filed and said it “strongly disagrees.” The FTC's case page lists the matter as pending; it is in the U.S. District Court for the Western District of Washington.

What the new passages allege

The dispute is about how Amazon sells the ads that appear alongside shopping search results. Advertisers bid on keywords, and the FTC says Amazon told them for years that it ran a “second price” auction, in which the winner pays “one cent more than the next highest bidder.” The complaint says that in late 2018 Amazon began adding undisclosed surcharges through “soft reserve pricing” systems, reaching Sponsored Products ads in 2019, the year the FTC's August release gives.

The complaint also says the Display Ads business was going to miss its 2023 financial plan by $40 million, and quotes the head of Amazon Ads writing to a senior vice president:

I’d like to pull out all of the stops (without doing unnatural acts) to close our gaps to plan.

When one advertiser asked whether “something has changed with respect to the second price auction process,” an account manager replied that “there is not a bug, or a change in auction style,” and pointed to a more crowded marketplace. The FTC calls that answer false.

Why the FTC says the auction type matters

The FTC's case rests on a view of how advertisers bid, and Amazon rejects it. In a second-price auction, the agency says, bidders tend to offer close to what a click is worth to them, because they pay only what it takes to win. In a first-price auction they pay what they bid, so, it says, they often shade their offers down. It argues that advertisers kept bidding as if in a second-price auction while more and more of their clicks were priced like first-price ones. Its August release says the complaint alleges that Sponsored Products advertisers paid their own bid 30% to 40% of the time in 2021, 70% in 2022 and about 80% in 2024.

The same release says the complaint alleges that more than one million brands and sellers were affected, including over 500,000 small and medium-sized businesses, at a likely cost of tens of billions of dollars over more than seven years. FTC Chairman Andrew Ferguson said in August that the higher costs “were largely passed on to American consumers.”

Amazon's answer

Amazon's statement dates from August 31, before the new details were public. It says the company has priced clicks with a form of generalized second-price auction since 2006, and that it began testing soft reserve prices because better ad-relevance models were letting ads win placements below market value. It says such reserves are common across the industry. “In no scenario does an advertiser pay more than their bid,” the statement adds.

On the bidding theory, Amazon says the FTC's claim “fundamentally misunderstands how advertisers behave.” “Advertisers adjust bids based on real-world outcomes, not descriptions of auction mechanics,” it says.

The company also says advertisers were not harmed, because average cost-per-click for Sponsored Products search ads stayed flat after inflation from 2019 through 2024. By our reading, that multi-year average for one ad type and the FTC's maximums and holiday increases do not measure the same thing. Amazon adds that the complaint cites no evidence of higher consumer prices and that its campaign console has said since 2018 that a bid is the most an advertiser could be charged. It describes the FTC's evidence as a handful of simplified communications and calls the idea of a companywide effort to deceive “patently false.” “A stray email is not indicative of a team's intent or even collective viewpoint,” it says.

What comes next

The FTC and the states are asking the court for a permanent injunction, monetary relief and other remedies. In September 2025, in a separate FTC case, Amazon agreed to pay $2.5 billion to settle allegations over Prime sign-ups and cancellations.