FTC sues Amazon for $20 billion ad auction rigging

The Federal Trade Commission filed a lawsuit against Amazon on Tuesday, accusing the tech giant of rigging online ad auctions to generate an extra $20 billion in revenue. Regulators allege Amazon manipulated the system by replacing actual auction results with artificially inflated prices it controlled. The practice allegedly happened across billions of ad auctions, affecting advertisers who had no way to detect the scheme.

This lawsuit is the latest escalation in a long-running battle between regulators and Amazon over its dominance in digital advertising. The FTC’s complaint follows years of scrutiny into whether Amazon abused its market power to squeeze out competitors and overcharge advertisers. In 2023, the agency sued Amazon again, arguing the company used its retail and cloud computing divisions to stifle competition. The ad auction case, however, focuses on a narrower but highly lucrative part of Amazon’s business: its digital ad marketplace, which competes directly with Google and Meta.

The FTC claims Amazon’s ad platform, Amazon DSP, tricked advertisers into paying more by reporting fake higher winning bids. Internal documents cited in the lawsuit reportedly show Amazon employees knew the system was misrepresenting auction results. One former employee told regulators the practice was “standard operating procedure” at Amazon. Advertisers had no visibility into the rigging, the FTC alleges, because Amazon controlled both the auction mechanics and the data reported back to them.

The lawsuit seeks to block Amazon from continuing the practice and force the company to return the allegedly ill-gotten $20 billion. It also aims to dismantle what the FTC calls Amazon’s “monopolistic control” over the digital ad supply chain. If successful, the case could reshape how online ads are bought and sold, forcing Amazon to overhaul its ad tech or face severe financial penalties. The outcome may also influence broader antitrust enforcement against big tech, setting a precedent for how regulators handle similar cases in the future.