“The FTC and attorneys general from 22 states sued Amazon, alleging it used a hidden 'soft reserve price' mechanism in its ad auctions that inflated winning bids and overcharged more than a million advertisers by over $20 billion.”

The lawsuit exists and the claim's core elements match the plaintiffs' own filings. The FTC states that 22 states joined it in filing suit against Amazon, alleging deceptive and unfair practices that secretly inflated prices in its ad auctions, and that beginning in 2019 Amazon changed its auction rules without notice by adding an undisclosed surcharge it referred to internally as a "soft reserve price," resulting in advertisers paying substantially more than the price the auction would have produced. The FTC names the attorneys general of Alaska, Arizona, California, Colorado, Florida, Idaho, Illinois, Indiana, Iowa, Kentucky, Louisiana, Maryland, Nebraska, New Jersey, New York, North Carolina, Oklahoma, Pennsylvania, Rhode Island, South Carolina, Vermont and Washington, and says the affected advertising customers include over 500,000 small and medium-sized businesses; it also alleges the scheme likely extracted tens of billions of dollars, and describes an "invented auction participant" and hidden "proxy 2nd price" bids as essentially shill bids. That is 22 states, matching the claim. On the dollar and advertiser figures, the co-plaintiff North Carolina AG states the scheme overcharged more than 1.2 million advertising customers over $20 billion since 2019. The Washington Post reports the suit says more than 1 million advertisers were affected. Excerpts of the complaint itself describe a two-stage calculation in which Amazon first runs a GSP auction to determine the winning bid and the resulting "GSP CPC," then transforms that into the final CPC by calculating a "soft reserve" price that can secretly raise prices. Amazon disputes the case. It calls the lawsuit misguided, says it strongly disagrees, and says the FTC's complaint cites no evidence of consumer price increases. Amazon says its campaign-building tools have told advertisers since 2018 that their bid is the maximum they can be charged, argues soft reserves are common industry practice, and says advertisers adjust bids based on real-world outcomes rather than descriptions of auction mechanics. Amazon also says that after reviewing roughly 1.5 million pages spanning six years the FTC relies on a handful of simplified communications, and it asserts that inflation-adjusted average cost-per-click for sponsored product search ads stayed flat from 2019 to 2024.