The US Federal Trade Commission and 22 states have sued Amazon over advertising-auction pricing. Plaintiffs allege Amazon described a second-price auction, where the winner pays only slightly above the next bid, while using an undisclosed soft reserve from 2019. They estimate about 1.2 million advertisers were affected and more than $20 billion in extra revenue was generated. These are allegations, not findings of fact.
The dispute
In a conventional second-price auction, the highest bidder wins but the next competitive bid sets the bill. FTC exhibits include Amazon Ads and partner training that explained the model this way. The regulator alleges Amazon inserted a hidden reserve capable of lifting the price above the real second bid and knew advertisers were bidding under a different understanding.
- 22 states joined the federal action.
- About 1.2 million advertisers may have been affected, plaintiffs estimate.
- More than $20 billion is the alleged additional revenue since 2019.
- 181 pages make up the initial complaint.
Amazon’s response
Amazon calls the case misguided, says the FTC misunderstands its auctions and describes soft reserves as normal industry practice. Claims about overcharging and concealment therefore must be attributed to the plaintiffs until tested in court.
Why retail media should care
A retail-media platform controls the store, auction, demand data, attribution and reporting. Advertisers cannot reconstruct the full set of rival bids. A reserve price can be legitimate when its role is clear; the central question is whether the public description matched the real mechanism and allowed informed bidding.
What advertisers can do
- Do not assume a maximum bid is protected by pure second-price logic;
- monitor actual CPC, margin and incremental product sales;
- separate branded, defensive and genuinely new demand;
- retain historic bid and price exports;
- request clear reserve, fee and auction rules.
UA Banner has covered Amazon’s integration of media and commerce and why transparent rules support trust. The case shows the other side of integration: convenience increases dependence on internal rules.
UA Banner conclusion
The case should not be reported as proven fraud, but it is already a serious transparency test. If auction behaviour differed from advertiser training, rational bid management itself was impaired. Retail media needs standard auction logs, clear reserve policies and independent audits before the next dispute.
Sources: the official FTC release, the complaint and AdExchanger analysis. Amazon disputes the allegations.
