The FTC Says Amazon Secretly Raised the Price of Its Own Ad Auctions. The Stock Lost 2.5%.
Twenty states and the Federal Trade Commission allege a “soft reserve” that Amazon began slipping into its auctions in 2018, intervening 70% to 80% of the time. Advertisers say they lost more than $20 billion. Amazon’s ad business earned $68 billion last year.
By Sean Anees Saifi · Capital Wealth · Published Tuesday, September 1, 2026 · Source: The Wall Street Journal, August 29–30 and September 1, 2026 editions
Key Points
Filed Monday in Seattle by the FTC and more than 20 state attorneys general, including New York, California and Florida — the agency’s third major case against Amazon.
The complaint: Amazon began entering its own bids in ad auctions in 2018 to raise the price merchants paid, calling it a “soft reserve” internally. “We don’t tell them about the surcharge,” one ad-team member wrote in 2024.
Amazon intervened to set the price 70% to 80% of the time in recent years and raised pay-per-click costs by 50% on major shopping days, the FTC says.
Advertisers allegedly suffered more than $20 billion of harm. Amazon’s ads earned $68 billion in 2025, the third-largest digital ad platform behind Google and Meta.
Amazon says it sets a “real-time minimum value,” that advertisers never pay more than they bid, and that the practice is common across the industry. Shares fell 2.5%.
$68B
Amazon ad revenue, 2025
70–80%
auctions where Amazon set the price
+50%
pay-per-click on big shopping days
−2.5%
AMZN, Monday
Amazon already paid $2.5 billion last year to settle a case over Prime sign-ups; an illegal-monopolization trial is set for next year.
In one line: A regulator found the surcharge in the auction; the platform that runs the auction and sells the ads and ships the goods is still the platform.
Every time you search for a product on Amazon, merchants have already bid to be at the top of the page. The Federal Trade Commission, joined by more than 20 states, sued Amazon on Monday and alleged that since 2018 the company has been quietly bidding in those auctions itself — a “soft reserve,” executives called it — to push up the price the winner pays.
Under the auction rules, a higher competing bid raises the price. Amazon knew the merchants’ bids and did not disclose its own. In recent years it intervened to set the price 70% to 80% of the time, the complaint says, and on major shopping days pay-per-click costs rose 50%. Ad managers tracked the “surcharge” and limited who knew about it. “We don’t tell them about the surcharge,” one team member wrote in 2024. Another memo: “the benefit to Amazon comes at the cost of advertisers.”
The size of it
Line
Figure
Amazon ad revenue, 2025
$68 billion
Alleged advertiser harm
more than $20 billion over seven years
Prime settlement, last year
$2.5 billion
Monopolization trial
next year
Amazon says its approach sets a “real-time minimum value” reflecting what an ad is worth, that advertisers never pay more than they bid, and that the concept is common across the industry. It says consumers were not affected. The FTC says inflated ad costs flow into the fees that squeeze sellers and raise prices for shoppers.
What changes and what does not
The usual outcome of a case like this is a fine, a consent decree and some plain language in the auction rules. The Justice Department’s case against Google’s ad practices is the model. What does not change is the position: Amazon is the third-largest ad platform in the world because it is where the shopping happens, and the ad business is the highest-margin part of a company that also runs the cloud and the trucks.
The shares fell 2.5% Monday, on a day the Dow fell 0.7%. Marketers told the Journal they were “aware and concerned” and that Amazon’s scale and results remain unmatched for small sellers. That sentence is the whole investment case, and the lawsuit did not touch it.
What It Means For Your Portfolio
Hold — a fine and a consent decree are a cost, not a change in the business
Amazon stays where it is across the Capital Wealth books. A regulator finding a surcharge in the auction is a headline; the platform that runs the auction, sells the goods and ships them is the business, and it is intact.
The risk we do watch is cumulative: this is the third major FTC case, a monopolization trial is next year, and Europe is adding obligations. Regulatory drag is a slow tax on a fast company. It is priced, not ignored.
If you own Amazon inside an index fund, you own it at roughly 4% of the S&P 500 whether you like Monday’s news or not — which is one more argument for the equal-weight sleeve we added this week.
