SECURITY Signal 51
FTC and 22 states sue Amazon over undisclosed ad auction surcharge allegedly extracting $20 billion since 2019
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The FTC and 22 state attorneys general sued Amazon, alleging the company secretly added a "soft reserve price" surcharge to its second-price ad auction system in 2019, inflating advertiser costs by more than $20 billion.
For teams running sponsored product campaigns on Amazon, the lawsuit alleges the auction mechanics documented to advertisers were silently altered, meaning bid strategies built on the stated second-price model may have been systematically overpaying. The case underscores how undisclosed changes to pricing algorithms can shift costs across an entire platform's customer base without any visible signal to the people paying the bills.
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The FTC alleges Amazon added an undisclosed "soft reserve price" to its second-price ad auction system in 2019 without notifying advertisers, citing internal communications between ad executives.
The complaint cites an executive allegedly acknowledging the use of an "invented auction participant" to increase prices, and estimates more than $20 billion was extracted from advertisers since 2019.
Amazon called the lawsuit "misguided" and said it provided advertisers with guidance about auctions and pricing in campaign management tools, while claiming the FTC's complaint lacks evidence of consumer price increases.
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