FTC investigation could target amazon’s ad auctions over alleged reserve pricing

At a glance:

• The FTC is probing Amazon for possible undisclosed price floors in its sponsored‑ads auctions.
• Amazon reported $68 billion in ad revenue for 2025, covering display, video and search ads.
• The complaint could involve multiple state attorneys general and may lead to penalties worth billions.

What the complaint alleges

The Federal Trade Commission is reportedly examining whether Amazon’s real‑time ad auctions hide a “reserve price” – a minimum bid that advertisers must meet before their sponsored listings appear in search results. According to Bloomberg’s anonymous sources, the agency wants to know if Amazon disclosed these price floors to advertisers. The practice, sometimes called “reserve pricing,” would mean that advertisers could be bidding under the false impression that they are competing with rivals, when in fact they are simply trying to meet an invisible threshold set by Amazon.

How amazon’s ad auctions work

Amazon’s marketplace runs automated auctions that decide which sponsored listings appear alongside organic product results. When a shopper types a query, the platform runs a sub‑second auction that matches advertisers’ bids to the available ad slots. The process mirrors Google’s search‑ad auctions, which also happen in milliseconds. In theory, each advertiser submits a maximum bid; the highest bids win the placement. If a reserve price exists and is not disclosed, lower‑bidding advertisers might unintentionally overpay to clear the hidden floor, effectively handing extra revenue to Amazon.

Potential financial impact

Amazon’s total ad revenue for 2025 was reported at $68 billion, a figure that includes all formats such as video, display and search‑based sponsored listings. Bloomberg’s sources note that the FTC probe stems from an earlier complaint alleging that Amazon “littered its marketplace with irrelevant search results,” a tactic that pushes sellers to become advertisers simply to stay visible. If the FTC, together with several state attorneys general, confirms the reserve‑pricing practice, the resulting penalties could run into the billions of dollars, according to the same sources.

Historical context and the enshittification theory

The allegations echo a concept introduced by author Cory Doctorow in a 2023 essay describing “enshittification.” Doctorow argued that platforms first extract surplus value from users, then from suppliers, and finally from shareholders, ultimately degrading the user experience. He cited Amazon’s search results for “cat beds” as an example, where the first five screens were reportedly 50 % ads, many for products that Amazon itself had cloned from third‑party sellers. This dynamic, according to Doctorow, forces sellers to pay steep “junk fees” – up to 45 % – while the platform itself avoids those fees on its own inventory.

Legal landscape and next steps

Bloomberg reports that a new complaint has already been drafted and that the FTC’s action may be coordinated with attorneys general in multiple states. While Amazon and the FTC declined to comment on the matter, the filing of a formal complaint would trigger a legal process that could include discovery, hearings and potentially a settlement. Companies that rely heavily on Amazon’s sponsored listings may need to reassess their bidding strategies and budgets in anticipation of any changes to the auction rules.

What advertisers should watch

Advertisers should monitor any communications from Amazon regarding changes to its ad‑auction policies, especially any disclosures about minimum bid requirements. Brands may also consider diversifying their paid‑search spend across other platforms to mitigate risk. Legal counsel familiar with antitrust and consumer‑protection law can help assess exposure and advise on compliance steps should the FTC’s investigation move forward.