FTC and states sue Amazon over advertising practices

The Federal Trade Commission, joined by more than 20 state attorneys general, filed a lawsuit accusing Amazon of advertising practices that allegedly overcharged advertisers and distorted competition on its marketplace.

The complaint claims Amazon used its control of search placement and sponsored-product tools to extract higher fees while limiting the ability of sellers to reach customers through independent channels.

The allegations

According to the suit, Amazon's advertising systems favored higher-paying sponsored placements in ways that were not adequately disclosed, and the company used its data advantage to steer shoppers toward results that maximized its own ad revenue.

States joining the case argued that small and mid-size sellers bore the cost through rising advertising budgets that did not reliably improve organic visibility.

Amazon's response

Amazon has denied the core allegations in prior related matters and is expected to contest the new complaint vigorously. The company has long argued that its advertising tools are optional, transparent and beneficial to sellers who choose to use them.

A company spokesperson said Amazon looks forward to showing that its practices comply with the law and that advertisers retain control over their spending.

What the case could mean

If successful, the suit could force changes to how sponsored products appear in search results and how fees are calculated. Remedies under discussion in antitrust circles include stronger disclosure rules and limits on self-preferencing.

The case adds to a broader wave of federal and state actions targeting large platform companies over advertising, search and marketplace power.