FTC filing puts figures on alleged Amazon ad surcharges

Brands that spend heavily on Amazon search ads at peak now have a sharper question for their marketing teams: how much of a price rise on a big shopping day came from competition, and how much came from the platform? The Federal Trade Commission and 22 states recently filed an updated version of their complaint, with details that had previously been redacted. These are allegations in a lawsuit, not court findings, and Amazon rejects the case.

What the filing adds

The FTC and its state partners sued in August in the Western District of Washington. The November release said the complaint alleges that Amazon secretly raises advertising prices by as much as 50% above auction results on ordinary days, and by as much as 250% on major shopping days like Prime Day or Black Friday.

The complaint also alleges that average cost-per-click rose 20% during the 2021 holiday season, with some advertisers seeing increases of over 200%. It cites one large food and beverage advertiser that faced increases of more than 100% during Prime Day in 2023. According to the FTC, Amazon acknowledged internally that the resulting fall in that advertiser's return on ad spend was "destroying campaign performance".

The most awkward passage concerns what advertisers were told. The FTC said that one advertiser asked directly whether the auction had changed, and that an Amazon account manager falsely replied that there was "not a bug, or a change in auction style" and that a crowded marketplace explained the higher costs.

Amazon's answer

Amazon has called the case a “misguided lawsuit”. It said a winner whose bid clears both its hard and soft reserves pays the soft reserve, and it stated: "In no scenario does an advertiser pay more than their bid." It also said average cost-per-click for Sponsored Products search ads remained flat when adjusted for inflation from 2019 through 2024, and said "we estimate" advertisers saved over $8 billion from 2021 to 2025 because its auction weighs relevance. That statement responds to the lawsuit generally and does not mention the November filing.

The two sides' numbers are not direct opposites. A flat long-term average does not settle what happened on particular peak days, and a maximum "as much as" figure does not show what a typical advertiser paid. Busier auctions on big shopping days are also a real competing explanation, which is why the court record matters.

What retail leaders can do now

Suppliers and sellers can compare their own cost-per-click and return on ad spend on peak and ordinary days, then ask their account teams in writing how prices are set. Retailers running their own media networks might ask a simpler question: would their sales teams' explanations of auction pricing match the way the system really works?