[Photo Credit: Reuters]

Amazon.com opens new tab illegally raised prices for advertisers by surreptitiously raising the minimum price required to place ads that ‌promote their products, the U.S. Federal Trade Commission alleged in a lawsuit filed in federal court.

The agency, joined by a bipartisan group of 22 U.S. states, said Amazon systematically inflated auction prices for advertisers without their knowledge, costing them $20 billion or more. “Amazon has been able to generate billions of dollars in profits — at the ​expense of its auction advertising customers,” the FTC stated in its suit, filed in federal court in the Western District of ​Washington state.

Advertisers suffered billions of dollars in harm from higher ad prices, while the states could seek civil penalties ⁠and attempt to recover some of that money, the FTC alleged. The agency will seek “tens of billions” in damages, according to an official, ​though a precise amount has not yet been settled.

Amazon, in a blog post Monday, denied wrongdoing, saying its advertising policies aim to show shoppers ​the most relevant ads, adding that the average cost per click for advertisers remained flat from 2019 to 2024, while the sales generated from those clicks rose.

The suit centers on three types of advertisements that run ​alongside search results: sponsored products, brand and display ads. The FTC’s allegations date to change in Amazon’s auction rules from 2019. Online ad auctions occur in the ‌fractions ⁠of a second typically after a search term is entered, with marketers’ computer systems bidding for the right to have their messaging appear.

According to the FTC, Amazon sometimes entered its own bids in the auctions, ostensibly raising prices for others. As part of the scheme, it attempted to conceal those bids from the advertisers, the FTC alleged.

Due to the higher cost of advertising, consumers paid higher prices for the companies’ goods on the ​Amazon, the FTC alleged. As much ​as 80% of sponsored products ⁠auctions had some form of intervention by Amazon, according to the complaint.