FTC Sues Amazon Over Alleged Ad Auction Manipulation

The Federal Trade Commission filed a major lawsuit against Amazon on Monday, August 31, 2026, accusing the e-commerce giant of secretly manipulating its advertising auction system to overcharge businesses, allegedly extracting more than $20 billion from approximately 1.2 million advertisers over several years. The lawsuit, filed in a Seattle federal court, is joined by a bipartisan coalition of 22 state attorneys general and marks the third significant federal action against Amazon in recent years. The complaint alleges that since 2018, Amazon has systematically deceived advertisers by introducing hidden "soft reserve" bids into its auction process. In a standard second-price auction, the winning bidder pays just above the second-highest bid. However, the FTC claims Amazon began placing its own bids just above the runner-up, effectively raising the minimum price advertisers had to pay without their knowledge. This practice allegedly allowed Amazon to inflate pay-per-click costs by as much as 50% on major shopping days, such as Black Friday.