The facts
On August 31, 2026, the FTC and 22 states sued Amazon in the Western District of Washington. The complaint says for more than seven years Amazon secretly inflated what more than a million brands and sellers paid to advertise on its store.
Amazon told advertisers it ran a “second price” auction: you win, you pay a penny more than the next guy. The FTC says Sponsored Products advertisers were charged their own winning bid close to 80 percent of the time by 2024.
Internal paper, as quoted in the complaint: “a surcharge hidden in it.” An “invented auction participant.” Executives bragging that a “clever non-transparent way to charge first price” was “incredibly effective,” including on Prime Day. These are allegations. Amazon has not been found liable in this case.
Our take
This is “we told you the game was poker, then we dealt ourselves extra cards and billed you for the privilege.” They named the ghost. A fake bidder, born in a spreadsheet, whose only job was to make the real bidders pay more.
If a guy did that in a room with actual cards, you would throw him into the parking lot. Do it with an algorithm and a training video and MBAs call it yield optimization. The extra money does not die in a conference room. It shows up in the price of the shit you buy. The FTC said that part out loud.
Maybe a judge buys Amazon’s story. Until then the public version is: they told a million advertisers the auction was fair, then built a phantom to pick their pockets, then spent years making sure nobody noticed. That’s not clever. That’s a mugging with a laptop.
