Amazon sued by FTC and 22 US states over ad sales practices

The Federal Trade Commission and 22 US states have filed a lawsuit against Amazon over its digital advertising sales practices, alleging the company quietly manipulated auction mechanics to inflate what advertisers paid for sponsored product placements. The suit, filed in Seattle federal court, targets a business segment that generated $68 billion in revenue for Amazon in 2025.

Amazon’s stock dropped roughly 2.8% to 3.3% following the news.

What Amazon allegedly did

At the core of the FTC’s complaint is a mechanism called “soft reserve” bids. These are internal price floors that Amazon allegedly inserted into its advertising auctions starting in 2018, effectively setting minimum prices that advertisers had to beat to win placement.

The FTC alleges these soft reserve bids affected between 70% and 80% of Amazon’s ad auctions. On major shopping days, the practice reportedly pushed pay-per-click costs up by as much as 50%.

The $68 billion question

Amazon’s advertising business has grown into a juggernaut. The $68 billion it pulled in during 2025 makes it the third-largest digital ad platform on the planet, behind only Google and Meta.

The lawsuit is joined by states including New York, California, and Florida.

A pattern of regulatory pressure

This isn’t Amazon’s first time facing coordinated federal and state legal action. In 2023, the FTC and more than 17 states, along with Puerto Rico, filed a separate antitrust case targeting Amazon’s alleged monopolistic practices in online retail more broadly.

Amazon also reached a $2.5 billion settlement in September 2025 over its Prime subscription practices. The current advertising lawsuit is distinct from both of those actions.

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