The FTC just accused Amazon of rigging its own ad auctions to squeeze more money out of sellers.
The FTC and 22 states sued Amazon on Aug. 31 in federal court in Washington state, alleging the company secretly abandoned the second-price auction model it told roughly 1.2 million advertisers it used for Sponsored Products, Sponsored Brands and Sponsored Display ads. Under a genuine second-price system, the winning bidder pays just above the runner-up's bid. Regulators say Amazon began drifting from that model in 2018, increasingly charging winners something closer to their own higher bid, and that the shift generated more than $20 billion in what the FTC calls improper charges since 2019. Internal documents cited in the complaint reportedly show Amazon phased in the changes gradually and watched to see if advertisers noticed or cut spending before expanding them further.
For sellers, the case turns on a basic trust question: was the auction actually setting prices, or was Amazon quietly setting them instead. The FTC also argues the added ad costs likely got passed on to shoppers through higher product prices, which stretches the alleged harm beyond the 1.2 million advertisers into anyone who buys on Amazon. It's also a familiar shape for platform complaints: the company that runs the marketplace, writes the rules, and quietly adjusts the mechanism meant to keep itself honest.
Amazon says it never charged advertisers more than their own bid and points to average sponsored-ad prices falling by half since 2019, numbers that could both be true and still dodge the real question of what second-price was supposed to mean.