The FTC has updated its complaints against Amazon Ads, and the new unredacted materials accuse the e-commerce giant of increasing the average cost-per-click in 2021 by 20% during peak season. Amazon calls the lawsuit ‘misguided’ and says it make its case in court.
The Federal Trade Commission (FTC) has released previously redacted details of its lawsuit against Amazon Ads, in which it alleges the company rigged ad auctions.
The updated complaint, filed with the US District Court Western District of Washington, looks to illustrate the harm suffered by advertisers as a result.
The FTC is joined by a group of 22 US states, which accuse Amazon of using unfair and deceptive practices to inflate its ad prices without advertiser’s knowledge.
According to the unredacted document, Amazon secretly raised its ad prices by as much as 50% over auction results on a typical day; and by as much as 250% on significant shopping days like Black Friday or Prime Day.
The complaint was originally filed in September and alleged Amazon “secretly and systematically overcharged its approximately 1.2 million advertising customers by manipulating the ‘auctions’ that it uses to set the price of ads on its platform”.
This led to significant increases in ad prices on key shopping days. The updated complaint is now claiming Amazon raised the average cost-per-click by 20% in the 2021 during peak season, with some advertisers reporting increases of over 200%.
The inflation, which Amazon called ‘surcharges’, also contributed to a $87m global increase in ad revenue in 2022, the lawsuit alleges.
The internal report identified one unnamed food and beverage advertiser as “having three different advertising campaigns that saw significant CPC increases and ROAS decreases destroying campaign performance”.
The court documents read: “As explained internally by Amazon’s senior vice president in charge of Amazon Ads, in Amazon’s auctions ‘the second price isn’t set by an actual bidder, but rather by’ Amazon in the form of a ‘proxy second price that we calculate’.”
The FTC pointed out in its complaint that in 2023, Amazon executives spoke about the company’s corporate financial targets, outlining a need for an additional $40m in revenue.
Included in the complaint was an email from the head of Amazon Ads to the firm’s senior vice president of ad products and technology, which read: “I’d like to pull out all of the stops (without doing unnatural acts) to close our gaps to plan. I suspect that the entire gap won’t be closed, so whatever can be done with reserves (ideally at least $40MM would be helpful).”
Amazon calls the lawsuit ‘misguided’
Amazon posted a full response to the updated complaint, in which it has dubbed the lawsuit as “misguided”.
The statement said: “The FTC wants the public to believe this case is about higher prices for consumers. It is not.
“Average winning bids fell 50% from 2019 to 2025 on sponsored products search ads, and roughly 92% of placed ads are not given to the highest bid,” the tech giant argued.
“From 2019 through 2024, the average cost-per-click for Amazon’s sponsored products search ads remained flat adjusted for inflation, while conversion rates grew 24% from 2021 to 2025. Advertisers paid the same and got more as we meaningfully improved ad relevancy and therefore performance.”
Amazon said the FTC’s case “fundamentally misunderstands how advertisers operate”, with advertisers changing bids based on real-world performance rather than a description of auction mechanics.
The e-commerce giant confirmed it has reviewed around 1.5 million pages across six years, and found the FTC has relied on a “handful of simplified communications to allege a companywide effort to deceive,” which it calls “patently false”.
Amazon concluded its statement with: “We have shared all of this with the FTC on multiple occasions. The data, the industry context, the evidence of how advertisers actually behave, and the information showing our auction works as intended. They have shown little interest in engaging with the facts and appear more focused on trying to secure a substantial monetary victory for themselves and states they can lure with this possibility.
“The evolution of sponsored ads has been a journey toward better outcomes for everyone: providing sellers and vendors the ability to promote their products in the store, highly relevant advertising for shoppers, and stronger sales and performance for advertisers. We’ve provided advertisers with guidance about our auctions and pricing in the main tools they use to manage their campaigns, and we continue to update that guidance. We look forward to making our case in court.”
Affiliate Leaders has also reached out to the FTC for a comment, but is yet to receive a response.
