The U.S. Federal Trade Commission, joined by 22 states, has sued Amazon.com, Inc. (NASDAQ:AMZN) over allegations that the company secretly inflated prices in its advertising auctions for more than seven years. The FTC alleges that Amazon used an undisclosed "soft reserve price" to raise the amount advertisers paid above what competitive bidding would have produced.
According to the complaint, the practice affected more than one million brands and sellers and may have generated tens of billions of dollars in additional revenue for Amazon. The FTC also alleges that the pricing changes became increasingly aggressive, with advertisers paying their own bids roughly 80% of the time for Sponsored Products by 2024.
Amazon.com, Inc. (NASDAQ:AMZN) disputes the allegations, arguing that the FTC misunderstands how its advertising auctions work and that its pricing practices improve ad relevance and value for advertisers.
Photo by Bryan Angelo on Unsplash
The biggest positive for Amazon.com, Inc. (NASDAQ:AMZN) is that the lawsuit does not immediately undermine the underlying strength of its advertising business. Amazon generated about $68 billion in advertising revenue in 2025, making advertising an increasingly important and high-margin contributor to the company's overall profitability.

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