On August 31, 2026, the Federal Trade Commission and attorneys general from 22 states filed suit against Amazon over its advertising auction practices. It is a significant case for the industry, and it has generated a lot of commentary that is more heated than useful.
Here is what was actually filed, what Amazon has said in response, and the short answer on what it changes for your account, which is less than you might expect.
What the complaint alleges
The core allegation is about disclosure. According to the complaint, beginning in 2019 Amazon applied an undisclosed pricing floor to Sponsored Products auctions, referred to internally as a soft reserve price, without notifying the advertisers bidding into those auctions.
The specific claims in the filing include that the floor was applied in roughly 70% to 80% of auctions in recent years, that pay-per-click costs rose approximately 50% on major shopping days, and that the practice generated more than $20 billion from roughly 1.2 million advertising businesses since 2019.
These are allegations. They have not been tested in court and no finding has been made.
What Amazon has said
Amazon has publicly disputed the suit, describing it as misguided and stating that the FTC fundamentally misunderstands how digital advertising works. Amazon has also stated that average winning bids on Sponsored Products search ads fell roughly 50% between 2019 and 2025.
Worth noting that those two figures, the FTC's 50% increase on peak days and Amazon's 50% decrease in average winning bids, are not necessarily contradictory. They measure different populations of auctions. We worked through why in our look at 2026 CPC trends, and the short version is that a blended average across a rapidly growing long tail of cheap auctions can fall at the same time that concentrated peak-period costs rise.
What a reserve price actually is
Some context that has been missing from a lot of the coverage.
A reserve price is a floor below which an auction will not clear. If nobody bids above the floor, the inventory goes unsold rather than being sold cheaply. Reserve pricing is standard across digital advertising auctions and across auctions generally. It is not, by itself, improper or unusual.
The complaint is not that a reserve price existed. It is that this one was not disclosed to the people bidding into the auctions it governed. That distinction matters for understanding what is actually in dispute.
What it means for your account, practically
Three honest points.
Nothing has changed operationally. The auction runs today the way it ran last week. Litigation is slow, outcomes are uncertain, and there is no version of the next few months in which you should be managing campaigns differently because a complaint was filed.
You cannot isolate the effect in your own data. If you are hoping to look at your reports and work out what a reserve price cost you, you cannot. It is not a line item. It is not exposed in any report. This is a structural feature of bidding into an auction you do not operate, and it is true of every ad platform, not just this one.
The variable you control has not changed either. You have never been able to control the clearing price of an auction. What you control is exposure: which campaigns are live, carrying how much budget, during which hours, on which days.
That last point is the one worth sitting with, because it is where the FTC's peak-day claim intersects with something you can actually act on. If cost genuinely concentrates in high-competition windows, and both sides of this dispute seem to accept that peak periods behave differently from baseline, then how much of your budget is live during those windows is a decision worth making deliberately rather than by default. Scheduling by day and hour is the lever that exists on your side of the auction.
The one thing worth doing this week
Not a strategy change. A data habit.
Export your historical performance data if you are not already doing it. Amazon retains Sponsored Products reporting for roughly 95 days and Sponsored Brands and Display for roughly 60. Whatever comes of this case, and whatever else happens over the next few years, advertisers who can answer questions about their own multi-year history are in a materially better position than advertisers who can only see the last quarter.
That is not a reaction to the lawsuit. It was already the right thing to do. The lawsuit is just a reasonably good reminder that the reporting you can see is a subset of what is happening, and the record you keep yourself is the only one that is durable. We covered the specifics in our note on Amazon Ads data retention.
Where this goes
Litigation of this scale takes years. There may be disclosure requirements that come out of it, there may be a settlement, there may be a finding for Amazon. Predicting the outcome is not a useful exercise for anyone running an ad account.
The reasonable posture is to follow it, avoid acting on it, and spend the attention you might have given it on the parts of your account you actually control.
Frequently asked questions
What is the FTC lawsuit against Amazon about? On August 31, 2026, the FTC and attorneys general from 22 states filed suit alleging that beginning in 2019 Amazon applied an undisclosed pricing floor, referred to internally as a soft reserve price, to Sponsored Products ad auctions without notifying advertisers. The complaint alleges this raised advertiser costs. Amazon disputes the claims. The allegations have not been proven and the case has not been decided.
What is a soft reserve price in an ad auction? A reserve price is a floor below which an auction will not clear. Reserve pricing is common across digital ad auctions generally and is not inherently improper. The FTC complaint concerns disclosure: the allegation is that this particular floor was applied without being disclosed to the advertisers bidding into those auctions.
Does this mean I was overcharged on Amazon Ads? That is what the litigation will determine, and it has not been determined. The FTC alleges the practice raised costs across a large number of auctions. Amazon states the complaint misunderstands how its advertising works and that average winning bids on Sponsored Products search ads fell roughly 50% between 2019 and 2025. Individual advertisers have no way to isolate the effect in their own reporting.
Should I change my Amazon Ads strategy because of this lawsuit? No. Pending litigation is not a basis for changing account strategy, and nothing about how the auction operates today has changed. The useful response is the one that was already useful: audit where your spend concentrates, keep your own historical data, and manage exposure rather than trying to manage a clearing price you cannot see.
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