Amazon rigged $20bn worth of ad prices, US lawsuit alleges
Tuesday, 1 September 2026
Warm-up
- Where do you usually notice sponsored ads when you shop online?
- What helps you decide whether to click an online advert?
- Should platforms explain how their ad auctions work? Why?
Vocabulary
- bipartisan
- Supported by members of two rival political parties working together.
- complaint
- A formal legal document stating what a company or person is accused of.
- manipulate
- To control or change something secretly to gain an advantage.
- auction
- A system where people bid and the winner pays to get a place or item.
- watchdog
- An official body that monitors companies to protect the public.
- overcharge
- To make someone pay more than a fair or expected price.
- settlement
- An agreement that ends a legal dispute, often involving payment.
- consent
- Permission for something to happen or for someone to do something.
Reading
Amazon is facing a lawsuit from the US Federal Trade Commission (FTC) and a bipartisan group of 22 states, filed in Washington state. The complaint alleges the firm manipulated ad auctions and secretly overcharged more than a million advertisers, likely netting $20bn since 2019. It says Amazon overrode auction results with higher prices to boost profit, and that extra costs were passed to shoppers.
At issue are Sponsored Products and Sponsored Brands, sold through keyword auctions. In second‑price auctions, a winner expects to pay one cent above the next highest bid. The complaint argues Amazon instead charged the winner’s own bid close to 80% of the time, after deciding its auctions were not generating enough revenue.
Amazon strongly disputes the case. It says the US consumer watchdog misunderstands how advertisers operate and insists bids are adjusted based on performance. The company claims average winning bids fell 50% from 2019 to 2025, and roughly 92% of placed ads are not given to the highest bid. Its shares closed 2.5% lower after the announcement.
The FTC has clashed with Amazon before. In 2025, the company reached a $2.5bn settlement over Prime sign‑ups without consumer consent, including penalties and refunds.
Comprehension
- Who brought the lawsuit, and where was it filed?
- How much does the complaint say Amazon likely gained, and since when?
- What does the complaint say happened in second‑price auctions?
- How did Amazon respond to the allegations in the lawsuit?
- What happened to Amazon’s share price after the announcement?
Grammar focus
Adverbs and adverbial phrases: degree
Degree adverbs (much, very, considerably, largely) modify adjectives or verbs to show how strong something is. Use the adverb form to change an adjective or verb (not the adjective form). (Examples constructed.)
- Advertisers said winning bids were **much higher** after the change.
- Analysts described average bids as **significantly lower** in 2025.
Grammar exercise
Circle the correct option in each sentence.
- Some advertisers said bids felt (much / very) higher.
- Amazon (strong / strongly) disputes the complaint.
- The company says bids fell (considerably / considerable) since 2019.
- Analysts noted winning bids were (considerable / considerably) lower.
- The filing argued charges were (largely / large) passed to shoppers.
Discussion
- Are ad auctions on major platforms transparent enough for advertisers?
- Should higher ad costs be seen as harming shoppers? Why or why not?
- How convincing are Amazon’s counter‑claims about bids and pricing?
- What safeguards could a watchdog require without hurting innovation?
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