The Federal Trade Commission 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 FTC made the claim in a 5 November release on newly unredacted parts of its complaint against Amazon in federal court in Seattle. Amazon disputes the allegations.
By our arithmetic, a 250% increase means an advertiser could pay up to 3.5 times the price its auction set; The Wall Street Journal’s 5 November headline on the filing called it a tripling. Amazon’s published response to the lawsuit says “In no scenario does an advertiser pay more than their bid”.
Business Pill · Customer Acquisition Cost
A short explainer of customer acquisition cost, the price of winning a new customer, of which advertising is often the largest part. It teaches the general idea only and does not discuss Amazon or the FTC case.
The key insight: The FTC alleges that Amazon’s reserve prices lifted ad prices by as much as 250% above auction results on days like Prime Day and Black Friday, which by our arithmetic is up to 3.5 times the auction price; Amazon says no advertiser pays more than its bid.
The FTC and 22 states sued Amazon in August in the Western District of Washington. The FTC says the updated complaint “makes public factual details that had previously been redacted”. The complaint says that since 2019 Amazon has “secretly and systematically overcharged its approximately 1.2 million advertising customers” and that the scheme “has likely illegally extracted over 20 billion dollars” from them.
The mechanism the complaint describes is a two-step price. Amazon first runs a second-price auction, then, per internal documents the complaint quotes, “transforms the GSP CPC to the final CPC” by calculating a “soft reserve” price. CPC is cost per click, what an advertiser pays each time a shopper clicks an ad.
Ad price increases the FTC alleges in its updated complaint against Amazon, as described in the FTC’s 5 November 2026 release. These are allegations Amazon disputes, not court findings. The 3.5x and 1.5x multiples are our arithmetic.
The Shopping-Day Figures
The FTC says that during the 2021 holiday season Amazon “increased advertisers’ average cost-per-click by 20%, with some advertisers experiencing increases of over 200%”. For the 2022 holiday season, it says Amazon raised its surcharges “to increase its revenue by $87 million worldwide”.
One large food and beverage advertiser, the FTC says, “was subjected to price increases of more than 100% during Prime Day in 2023”, and Amazon internally acknowledged a fall in its return on ad spend that was “destroying campaign performance”.
The FTC also quotes a 2023 email in which, it says, the head of Amazon Ads told the senior vice president of ad products and technology: “I’d like to pull out all of the stops (without doing unnatural acts) to close our gaps to plan”. The release ties that email to a search for “an additional $40 million in revenue to meet corporate financial targets”.
When an advertiser asked whether “something has changed with respect to the second price auction process, either by design or mistake”, the FTC says an Amazon account manager replied that the team had been told “there is not a bug, or a change in auction style”. The FTC calls that reassurance false.
What Amazon Says
In its 31 August response, Amazon called the case “a misguided lawsuit” and said reserve prices “are common across the industry”. It says that when a winning bid clears both reserves, “they pay the soft reserve, which is less than they were willing to pay”.
Amazon also says that from 2019 through 2024 the average cost per click on Sponsored Products search ads “remained flat adjusted for inflation”, and that “The FTC cherry-picked a small number of materials” containing older or simplified auction examples. In its third-quarter 10-Q, filed 30 October, Amazon says: “We dispute the allegations of wrongdoing and intend to defend ourselves vigorously in these matters”.
Why It Matters for Amazon’s Ad Business
The case goes to the pricing engine behind Amazon’s advertising line. The 10-Q shows advertising services sales of $19,637 million in the third quarter, up from $17,703 million a year earlier, a 10.9% rise by our arithmetic. The complaint puts Amazon’s annual advertising revenue at “more than 68 billion dollars”.
As we read the two sides, they describe the same mechanism in different words: the FTC calls the reserve a hidden surcharge layered on a second-price auction, and Amazon calls it a soft reserve that reflects what a placement is worth. The dispute is over disclosure and its effect on advertisers, not over whether reserves exist.
As we read the FTC’s figures, its allegations concentrate on the busiest shopping periods: the 2021 and 2022 holiday seasons and Prime Day 2023, the windows in which advertisers would expect prices to rise from competition anyway.
FTC release, 5 November 2026
“Amazon falsely reassured them the price increases were the result of increased competition”
Three Implications
FOR ADVERTISERS The FTC says Amazon raised the average cost per click by 20% in the 2021 holiday season, with some advertisers seeing increases of over 200%; these are allegations Amazon disputes.
FOR AMAZON Its 10-Q says the FTC and Texas complaints seek injunctive relief and unspecified civil penalties, restitution and disgorgement, and that Amazon will defend itself.
FOR THE AD MARKETAmazon says reserve prices are common across the industry; the complaint says advertisers believe competitive auctions set prices on Amazon.
The framework says: “Pricing power leaves the model and lands on whoever controls the surface and its reusable workflows.”
As we read it, Amazon controls the shopping surface where Sponsored Products ads appear and runs the auction that prices them, which is why the dispute over how its reserve prices were disclosed reaches its advertising line. The framework is about AI agents and does not discuss Amazon or ad auctions.
What Is Not Established
These are allegations; no court has ruled on them. The version of the complaint posted on the FTC’s site that we read still shows blanks where some figures were redacted, so several of the numbers above come from the FTC’s description of the unredacted text. Amazon’s newsroom response we cite is dated 31 August, before the new details were published. The 3.5x multiple is our arithmetic on the FTC’s 250% figure.
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The FTC alleges Amazon raised ad prices up to 250% above auction results on days like Prime Day and Black Friday, up to 3.5 times the auction price by our arithmetic. Amazon says no advertiser pays more than its bid and that it will defend itself.
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A note on sourcing. The allegations are from the FTC’s 5 November 2026 release on its updated complaint and from the complaint as posted on ftc.gov, read on 9-10 November. Amazon’s response is from its 31 August 2026 newsroom post and its 10-Q filed 30 October 2026. The 3.5x multiple and the 10.9% growth rate are our arithmetic.
Gennaro Cuofano is a CRO and tech executive who has worked in AI since late 2015, starting with bringing NLP, natural-language generation, voice and chatbot products to the marketing industry. His background is in law and finance: he holds a Master's degree in Law and an International MBA with an emphasis on corporate finance (LUISS Business School and the University of San Diego, 2012), and worked as a financial analyst at a real-estate investment firm in San Diego and as an assistant controller. His work focuses on business model strategy, business engineering and, more broadly, structural analysis: how companies make money, read from their own filings. He created FourWeekMBA and leads research there and at The Business Engineer, his newsletter on AI and business strategy, with over 95,000 subscribers and more than 1,000 published analyses. His writing has also appeared on Entrepreneur (for example, How to Digitize a Family Business in Europe) and HackerNoon. Find him on LinkedIn and Substack. See how we source.
