The FTC Says Amazon Ran a Second-Price Auction That Wasn’t

The FTC and 22 state attorneys general sued Amazon on September 1 in the Western District of Washington, alleging the company told advertisers it ran a clean second-price auction — winner pays one cent above the next-highest bid — while secretly inserting a “soft reserved price,” an artificial bidder that inflated what winners actually paid. The complaint says Amazon has pocketed over $20 billion this way since 2019.

01What the complaint says actually happened

• The mechanic, allegedly: starting in 2019, Amazon’s system compared the winning bid against a hidden floor. If the bid cleared the second-highest real bidder but fell short of that floor, the advertiser paid the floor price instead of one cent above the next real bid — the opposite of the second-price promise it had marketed.
• The floor kicked in more over time. The FTC says the soft reserve activated in roughly 30–40% of eligible auctions in 2021, rising to about 80% by 2024 — most winners, most of the time, paying more than the auction Amazon described.
• Scope: over 1 million brands and sellers, including more than 500,000 small and medium businesses, across sponsored products, sponsored brands, and display — Amazon’s core self-serve ad formats.
• FTC Chairman Andrew Ferguson: “Amazon has millions of advertising customers who were misled into paying significantly higher prices. These higher costs were largely passed on to American consumers.”
• Amazon’s defense: the company calls the suit “misguided,” says inflation-adjusted average costs held flat from 2019 to 2024, and that 92% of winning ads in 2024 weren’t the highest bid — arguing relevance, not price alone, decides outcomes. Amazon says the FTC is relying on “outdated training materials and stray internal emails.”

02Why an operator should read this differently than a headline

A reserve price isn’t the allegation — every auction-based ad system, including Google Ad Manager’s own floor mechanics, uses one, and publishers set them deliberately for yield. The allegation is that Amazon marketed one auction type while running another, without disclosing the floor’s existence or its 2021-to-2024 activation rate to the advertisers paying it. That’s a transparency claim about what the auction actually is, not a claim that floors themselves are improper.

That distinction is the whole story for anyone running GAM/AdX, MCM, or a retail media stack: the mechanic that survives regulatory scrutiny is the one that’s disclosed, not the one that’s merely defensible after the fact. Publishers building retail media supply — Simon Property’s mall network and Reach TV’s airport CTV inventory both went live in the past two weeks — are entering exactly the closed-marketplace category the FTC just targeted for the first time; open programmatic exchanges have absorbed years of antitrust attention over auction mechanics, and this complaint extends that scrutiny to closed, single-platform auctions.

03What this changes for buyers and publishers

1. Buyers should ask retail media networks, not just open exchanges, to disclose reserve-price logic and its activation rate. The FTC’s number — 30% of auctions to 80% in three years — is exactly the kind of drift an advertiser cannot see without the platform disclosing it.
2. Publishers monetizing through closed platforms should treat this as a preview, not a one-off. Any auction mechanic marketed one way and run another is now a proven regulatory target, independent of the platform’s size or category.
3. If you operate a reserve price of your own, document what it is and why. The FTC’s complaint turns on the gap between description and mechanism — the defense against the same claim is a floor that matches what you told advertisers you run.

04The bottom line

The FTC isn’t arguing that Amazon set a price floor — it’s arguing Amazon said it wouldn’t, then quietly built one that caught 80% of winners by 2024, up from 30–40% three years earlier, and kept the difference. For an industry watching retail media become the next programmatic supply category, that’s the auction-integrity bar every closed marketplace now has to clear.