The U.S. Federal Trade Commission (FTC), which is a government agency responsible for protecting consumers and ensuring fair competition, has joined forces with 22 states in filing a lawsuit against Amazon. The lawsuit claims that Amazon manipulated online ad auctions to inflate prices, earning an estimated $20 billion in extra profits since 2019. According to the complaint, Amazon allegedly used a secret surcharge system to override the actual auction results, setting higher prices for advertisers than they should have paid. The FTC says this manipulation occurred in "second price" auctions, where advertisers typically pay just one cent more than the next highest bidder. However, the lawsuit alleges that Amazon often charged winning bidders nearly the full amount of their own bids, not just a small increment. Amazon has strongly denied the allegations, calling the lawsuit "misguided" and claiming the FTC has a fundamental misunderstanding of how its advertising system works. The company pointed out that average winning bids for its Sponsored Products search ads have dropped by 50% from 2019 to 2025, and that about 92% of the time, the highest bidder did not win the ad placement. Amazon also argued that the FTC's claim that consumers are harmed by higher ad prices is not accurate, suggesting that the alleged price increases have not been passed on to consumers. FTC Chairman Andrew Ferguson said in a blog post that higher advertising costs have "largely passed on to American consumers," meaning that consumers end up paying more for products and services due to increased ad spending. The lawsuit claims that Amazon violated the FTC Act and multiple state laws, and it seeks to hold the company accountable for these alleged violations. The case also aims to prevent Amazon from indirectly charging consumers more through inflated advertising costs. This lawsuit follows a previous case in which Amazon agreed to pay $2.5 billion to settle with the FTC over allegations that it enrolled millions of consumers in its Prime subscription service without their consent and made it difficult for them to cancel. The current case highlights ongoing concerns about how large tech companies manage advertising practices and their impact on both businesses and consumers.