SEATTLE — Amazon is facing a major new legal challenge after the Federal Trade Commission and 22 U.S. states sued the company over allegations that it secretly manipulated its advertising auctions and charged businesses more than they should have paid.
The FTC alleges the practices cost advertisers more than $20 billion and involved approximately 1.2 million advertising customers. Amazon has rejected the accusations.
Amazon's Advertising Business Faces New Scrutiny
Digital advertising has become an increasingly important source of revenue for Amazon.
The company generated roughly $68.6 billion in advertising sales during 2025, making it one of the world's largest digital advertising platforms.
The FTC alleges Amazon used hidden pricing mechanisms to increase the amount advertisers paid for sponsored listings.
According to the agency, advertisers were not adequately informed about how the auction system worked.
Amazon disputes that characterization.
The company says its advertising system provides value to businesses and that average advertising costs did not rise in the manner alleged by regulators.
The case could have significant consequences for digital advertising.
Google and Meta have also faced intense scrutiny over their advertising businesses.
Amazon's position is somewhat different because its advertising platform is closely connected to its enormous retail marketplace.
Businesses pay Amazon to promote products directly to consumers searching for goods.
If the FTC succeeds, Amazon could face financial penalties and potentially have to change how its advertising auctions operate.
Small and medium-sized businesses could be particularly affected by any changes.
Many rely on Amazon advertising to reach customers.
The case also highlights a larger issue in America's digital economy.
As technology companies develop increasingly sophisticated marketplaces, regulators are examining whether their pricing systems are transparent enough for businesses using them.
The lawsuit is likely to take time to resolve.
But for Amazon, it creates another regulatory challenge at a time when its advertising business has become an important component of its growth strategy.
