The Federal Trade Commission said it and 22 states filed an updated complaint against Amazon with unredacted details alleging the company used deceptive and unfair practices to secretly raise prices in its online search ads auction.
The agency said the new filing makes public details that were previously hidden and describes harm to advertisers. According to the complaint, Amazon covertly increased the prices advertisers paid on its platforms and misled them about the cause of the increases.
| Period or event | Alleged impact |
|---|---|
| Ordinary days | Ad prices raised by as much as 50% above auction results. |
| Major shopping days (Prime Day, Black Friday) | Ad prices raised by as much as 250% above auction results. |
| 2021 holiday season | Average cost-per-click up 20%; some advertisers saw increases over 200%. |
| 2022 holiday season | Hidden surcharges increased Amazon revenue by $87 million worldwide. |
| Prime Day 2023 (example advertiser) | Price increases of more than 100% for a large food and beverage advertiser. |
The FTC said it and state partners sued Amazon in August in the Western District of Washington. The press release did not say when the updated complaint was filed.
Unsealed allegations state that Amazon secretly lifted ad charges to as much as 50% above auction outcomes on typical days, and up to 250% above those outcomes on big shopping events such as Prime Day or Black Friday. The complaint also alleges that in the 2021 holiday period, Amazon raised advertisers’ average cost per click by 20%, with some seeing increases of over 200%. According to the filing, during the 2022 holiday season Amazon raised its surcharges in a way that increased its revenue by $87 million worldwide.
The FTC said both small businesses and large advertisers faced these surcharges. The complaint cites one large food and beverage advertiser that faced price increases of more than 100% during Prime Day in 2023. According to the filing, Amazon internally acknowledged that these increases reduced the advertiser’s return on ad spend and were “destroying campaign performance.”
The unsealed allegations also describe internal revenue efforts. According to the complaint, Amazon executives in 2023 discussed needing an additional $40 million to meet corporate targets, and the head of Amazon Ads wrote that “at least $40MM would be helpful.”
When advertisers asked whether the “second price auction” process had changed, the FTC says Amazon falsely told them higher prices were due to competition. In one example, after being asked if anything had changed in the auction “by design or mistake,” an account manager responded, “there is not a bug, or a change in auction style,” and attributed higher costs to a crowded marketplace, according to the complaint.
Attorneys general from Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington joined the updated complaint, the FTC said.
The FTC said the case concerns Amazon’s online advertising and alleged secret ad surcharges. The agency said the new details are now public in the updated filing.
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