The US Federal Trade Commission has filed a lawsuit against Amazon alleging the company manipulated its online advertising auctions over a seven-year period. The complaint, joined by attorneys general from 22 states, claims Amazon used hidden surcharges and fictitious bidders to drive up prices for advertisers between 2018 and 2025.
Regulators are seeking a €59 million civil penalty. The allegations centre on Amazon's breach of its own second-price auction rules, which should have meant winning advertisers paid only one cent more than the second-highest bid. Instead, the FTC says Amazon charged the full top bid in nearly four out of five product-advertising cases.
Internal company documents reportedly reference what employees called a hidden surcharge. The complaint also alleges Amazon inserted fake bidders into auctions to artificially inflate prices. Advertisers were overcharged by tens of billions of dollars over the period, according to the regulators' calculations.
How second-price auctions should work
Online advertising auctions typically operate on a second-price model. When multiple companies bid for ad space, the highest bidder wins but pays only slightly more than the second-highest offer. This system is designed to encourage honest bidding while keeping costs reasonable for advertisers.
Amazon's advertising business has grown substantially over the past decade, becoming a major revenue stream alongside its e-commerce operations. Companies pay to have their products appear prominently in search results, with auction winners securing prime placement. The FTC alleges Amazon systematically undermined this mechanism to extract higher fees.
The scale of the alleged overcharging matters for European advertisers as well. Many EU-based companies use Amazon's advertising platform to reach customers in the US market. If the allegations hold, European businesses may have paid inflated prices without knowing the auction mechanics were compromised.
Evidence from internal documents
The complaint cites internal Amazon documents that reference the hidden surcharge practice. Regulators say these materials show company employees were aware of the discrepancy between advertised auction rules and actual charging practices. The documents allegedly cover the period from 2018 through 2025.
Fictitious bidders represent a separate allegation. The FTC claims Amazon inserted fake participants into auctions to drive up competitive pressure, forcing genuine advertisers to bid higher than they otherwise would have. This practice, if proven, would constitute a clear violation of auction integrity standards.
Amazon denies the allegations and has stated it will appeal. The company has not provided detailed public comment on the specific claims about internal documents or the surcharge mechanism. Legal proceedings are expected to unfold over an extended period.
European regulatory context
This US enforcement action arrives as European regulators examine similar questions about digital advertising markets. The European Commission has been investigating various aspects of big tech companies' advertising practices under the Digital Markets Act and competition rules.
Transparency in ad auctions matters for the European Commission's digital regulation agenda. If US regulators can demonstrate systematic manipulation at a company of Amazon's scale, it may encourage European authorities to scrutinise advertising practices more closely on this side of the Atlantic.
The Digital Services Act and Digital Markets Act already impose transparency obligations on very large online platforms. However, the specific mechanics of ad auctions have not been the primary focus of EU enforcement to date. This US case could shift that attention.
The penalty sought
The €59 million civil penalty represents what regulators can seek under applicable US law for the violations alleged. This figure is separate from the tens of billions in overcharges that advertisers reportedly paid over the seven-year period. The penalty is meant to punish the company and deter future violations.
For a company of Amazon's size, €59 million is a relatively modest sum. The company reported hundreds of billions in annual revenue in recent years. Critics of US antitrust enforcement often argue that penalties need to be proportionate to company size to have meaningful deterrent effect.
The more significant financial exposure for Amazon could come from follow-on civil litigation. If advertisers can demonstrate they were overcharged, they may seek to recover those losses through separate lawsuits. The FTC's findings could support such claims if the agency prevails.
What happens in court
Amazon has stated it will appeal the allegations. The case will now proceed through the US federal court system, where both sides will present evidence and arguments. Internal documents cited by the FTC will likely become central to the proceedings.
Proving auction manipulation requires detailed technical evidence. Regulators must demonstrate not just that prices were higher than expected, but that Amazon intentionally designed its systems to violate its own stated rules. The company will argue its auction mechanics operated as disclosed.
The 22 state attorneys general joining the FTC signal broad political support for the action. State-level enforcement can sometimes be more aggressive than federal action alone, particularly in technology cases where consumer protection concerns resonate with voters.
Organisations
Federal Trade Commission · Amazon
