Amazon says the average winning bid on Sponsored Products fell by half between 2019 and 2025. If that’s true, ask yourself honestly: does that match what your account has actually shown?
That gap between the official numbers and what most sellers have experienced in their own ad accounts is the real story behind the FTC’s lawsuit against Amazon, filed August 31, 2026. One side says a hidden charge quietly inflated what advertisers paid. The other says a smarter ranking system saved advertisers money. Both claims come with real data behind them — which is what makes this case worth actually understanding rather than skimming past.
What the FTC Alleges
The complaint centers on Amazon’s Sponsored Products, Sponsored Brands, and Display auctions. For years, Amazon told advertisers these ran as standard “second-price” auctions — the winner pays roughly a cent more than the next-highest bidder, a model meant to reward advertisers for bidding closer to their true value rather than lowballing.
Starting in 2019, the complaint alleges, Amazon quietly added an undisclosed markup internally called a “soft reserve price” — effectively an invented bid that pushed the final price up without a real second bidder behind it. The complaint says this shifted the practical outcome closer to a first-price auction: advertisers reportedly paid the full amount of their own winning bid in roughly 30–40% of Sponsored Products auctions in 2021, climbing to about 70% in 2022, and near 80% by 2024.
One clarification worth making explicit, since it’s easy to misread: that 80% figure describes auctions an advertiser won, not all bids placed or all advertisers overall. It’s a meaningful number, but it’s not “80% of your spend was surcharged.”
The FTC also alleges the markup wasn’t applied evenly — pushed more aggressively during high-traffic periods like Prime Day and Black Friday, and eased back the rest of the year to avoid drawing scrutiny. The suit, joined by 22 state attorneys general, claims the practice extracted more than $20 billion from over a million advertisers, including roughly 500,000 small and mid-sized businesses. FTC Chairman Andrew Ferguson said the impact of this kind of conduct from a major platform “can be staggering.”
Amazon’s Response
Amazon has pushed back hard, calling the case misguided and disputing that either shoppers or advertisers were harmed. Its core defense rests on a different set of numbers:
- The average winning bid on Sponsored Products search ads fell roughly 50% from 2019 to 2025.
- Roughly 92% of ad placements do not go to the highest bidder — Amazon’s ranking weighs relevance to the shopper’s search ahead of bid size.
- The company estimates advertisers are getting meaningfully higher sales and better return on ad spend under this model than a pure highest-bid system would produce.
- Amazon frames the “second-price” structure at issue as a generalized second-price (GSP) auction — a model the complaint itself reportedly acknowledges has been standard across digital advertising for years.
Amazon’s position, in short: it says advertisers are never charged more than their own set ceiling, and that relevance-based ranking has made ads cheaper and more effective overall — not more expensive.
Why Both Sides Can Be Partly Right
Here’s the part that gets lost when this story is reduced to a single side: Amazon’s claim that relevance beats raw bid size, and the FTC’s claim that a hidden markup raised what auction winners actually paid, are not mutually exclusive. A system can genuinely reward relevant ads and still include an undisclosed floor that inflated the final price within that ranking. The dispute isn’t really about whether relevance matters — it’s about whether an artificial bid was quietly inserted into the pricing math on top of it.
This case also isn’t happening in isolation. It follows earlier FTC action against Amazon over Prime sign-up practices and a separate, ongoing antitrust case over its retail marketplace. And Amazon isn’t the only company facing this kind of auction-transparency challenge — Google is currently defending several publisher lawsuits (including one from The Atlantic, filed in January 2026) alleging it manipulated its own ad auctions in comparable ways. The pattern across cases is the same: when one company builds the auction, sets the rules, and collects the revenue, its pricing mechanics eventually get tested in court.
Should You Change Anything About Your Bids Right Now?
No — not because of the lawsuit itself. Litigation like this typically takes years, and nothing about how Amazon’s auction runs today changes based on a filed complaint. But this is a good prompt to actually look at your own numbers instead of relying on either side’s aggregate statistics:
1. Pull your search term report for the last 60–90 days. Flag any terms where cost-per-click has climbed while your conversion rate has stayed flat or dropped — that gap is the closest thing to a personal read on whether you’re paying more without getting more.
2. Check your historical CPC around Prime Day and Black Friday specifically, since that’s the exact window the complaint focuses on. If you have a couple of years of data, compare whether cost spikes during those events consistently outpaced your conversion gains.
3. Bid off your own conversion value, not off headline numbers from either side. Neither the FTC’s 80% figure nor Amazon’s 50% figure describes your account — only your data does.
4. Don’t expect a refund to change your strategy. Even if the case settles with restitution for advertisers, that’s a separate outcome from what you should be doing with your budget today.
The Bottom Line
This lawsuit is genuinely contested, with real numbers on both sides, and it’s likely to take years to resolve — most cases like this end in a settlement rather than a clean ruling either way. What’s actually useful for sellers isn’t guessing who wins; it’s using this as a reason to audit your own cost-per-click trends against your own conversion data, since that’s the only dataset that tells you what’s actually happening in your account.
