Amazon sued by US FTC, 22 states over alleged $20 billion ad auction overcharges

San Francisco: The US Federal Trade Commission (FTC) and 22 states sued Amazon on Monday for allegedly "manipulating" online auctions for digital advertising, resulting in more than $20 billion in overcharges for 1.2 million customers.

Amazon "has secretly and systematically overcharged its approximately 1.2 million advertising customers by manipulating the 'auctions' that it uses to set the price of ads on its platform," says the complaint, filed in a federal court in Washington state.

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In a blog post, Amazon called the lawsuit "misguided" and "flawed," and said that regulators "cherry-picked" outdated internal documents.

California Attorney General Rob Bonta told reporters on Monday that Amazon "has rigged billions of ad auctions."

California is one of the states suing alongside the FTC.

The complaint cites three separate advertising products at issue: Sponsored Products, Sponsored Brands and Sponsored Display.

"Based on numerous internal documents describing its 'hidden' 'surcharges,' Amazon's scheme has likely illegally extracted over 20 billion dollars from its unwitting advertising customers," the complaint says.

The filing alleges that in 2018 "Amazon began secretly manipulating its auction results to increase its ad prices" and "gave its customers no notice of this change and took affirmative steps to conceal it."

This is the third major lawsuit filed against Amazon by the FTC.

In September 2025, Amazon agreed to pay $2.5 billion to settle allegations that it used deceptive practices to enroll consumers in Amazon Prime and made it difficult to cancel subscriptions.

And early next year, a trial is scheduled to begin in a case that accuses Amazon of illegally maintaining a monopoly in online retail.

Amazon generated more than $68 billion in revenue from advertising alone last year; its total revenue in 2025 reached nearly $717 billion.

Its stock closed down 2.5 percent Monday.

Amazon is the third largest digital advertising provider globally.

Google, which has dominated the online advertising market for decades, is expected to drop into the number two position as Meta overtakes it by the end of the year, according to a recent report from analytics firm eMarketer.

Bipartisan crackdown

Despite its hands-off posturing, the Trump administration has continued the Big Tech crackdown pursued by former president Joe Biden's administration.

Today's lawsuit against Amazon is a bipartisan effort, which "doesn't happen all too often these days," Democrat Bonta said on Monday.

Texas Attorney General Ken Paxton, a Republican, announced Monday that he filed a similar but separate case against Amazon for "rigging" its advertising auctions.

In addition to the antitrust case against Amazon's alleged online retail monopoly, federal US regulators have launched four additional competition lawsuits against tech giants since 2020.

The Department of Justice (DOJ) sued Google over its digital advertising and online search businesses and won partial victories.

In 2024, the DOJ also sued Apple for allegedly making it difficult for customers to switch to devices made by other manufacturers, such as Android.

Apple and the DOJ are discussing a potential settlement before the case goes to trial, according to a July report from Bloomberg.

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The FTC sued Meta in 2020 over its acquisition of messaging app WhatsApp, which the agency claimed had helped Meta maintain an illegal monopoly in "personal social networking."

However, a federal judge dismissed the case in November 2025. In January, the FTC said it would appeal that decision.