The FTC Just Sued Amazon Over Sponsored Ads Pricing. Here Is What Every Advertiser Should Understand.

On August 31, 2026, the FTC and 22 state attorneys general filed suit against Amazon in federal court. The complaint alleges that for over seven years Amazon secretly inflated the prices that more than one million brands and sellers paid to advertise on its platform, extracting tens of billions of dollars from advertisers who believed they were participating in a fair auction. This does not change how you run campaigns today. But it changes what you know. What Amazon Told Advertisers - and What the FTC Alleges Amazon described its advertising auctions as generalized second-price (GSP) auctions. The promise: you bid your maximum, and if you win, you pay just enough to beat the next highest bidder, not your full bid. That framing appeared on Amazon's website, in training materials, and in direct presentations to advertisers. The FTC alleges that starting in 2019, Amazon changed how the auction actually worked without telling anyone. Amazon introduced what it internally called a "soft reserve price", a hidden minimum calculated after the auction determined the winner. If the soft reserve exceeded the price generated by competition, Amazon charged that amount instead. One internal document described the result as a "surchargedSecondPrice" with "a surcharge hidden in it." Another referenced what Amazon called an "invented auction participant", effectively a shill bid to push prices higher. By 2024, Sponsored Products advertisers were allegedly paying their own bid amount approximately 80% of the time, up from 30-40% in 2021. A nominally second-price auction was functionally operating as first-price the vast majority of the time. Internal documents quoted in the complaint show Amazon acknowledged that revealing the surcharges would cause "irrevocable damage to advertiser trust." A 2024 discussion between senior Amazon executives described the approach as a "clever non-transparent way to charge first price" that had been "incredibly effective" at driving revenue. Amazon's Response Amazon called the lawsuit "misguided" and disputed every core allegation. Its main arguments: average winning bids for Sponsored Products fell 50% from 2019 to 2025. Average cost-per-click remained flat adjusted for inflation from 2019 through 2024, while conversion rates grew 24%. Advertisers paid the same or less and got better results. In 2026, Amazon estimates advertisers will deliver 58% higher sales and 46% better ROAS compared to a bid-only ranking model. On soft reserve pricing, Amazon says it is a standard industry tool reflecting the true market value of a placement, similar to minimum prices on physical retail shelf space. It says advertisers never pay more than their bid, and that the materials the FTC calls misleading were low-reach training content with a combined 1,849 enrollments across three courses over their entire lifetimes. What Is Actually in Dispute Both sides agree on the core facts: Amazon introduced soft reserve pricing in 2018-2019 and did not proactively disclose this to advertisers. The dispute is whether that constituted deception and caused measurable harm. The FTC says advertisers bid higher than they would have known the auction was effectively first-price. Amazon says advertisers optimize on real-world performance, not auction format descriptions, so the mechanism did not change behavior or outcomes. These are genuine legal disputes that will be resolved in court over months or years. What This Means for Your Campaigns The lawsuit does not change how the auction works today. The soft reserve pricing has been operating throughout the entire period of your campaign history. What it does raise: if Amazon's auction functions closer to first-price than second-price for most transactions, the optimal bidding strategy differs from a second-price assumption. In a genuine second-price auction, bidding your true value is rational; you only pay the next bidder's price. In a first-price environment, that means consistently paying your full bid. The rational response is bid shading, lowering bids to find the actual clearing price. Look at your account data. If you pay close to your maximum bid most of the time, your bidding strategy may not be calibrated for the auction you are actually participating in. The case is filed, and Amazon will contest it. Follow the developments; the outcome could affect how Amazon is required to operate and communicate its advertising auctions going forward. This post reflects publicly available information from the FTC complaint, Amazon's official response, and reporting as of August 31, 2026. It does not constitute legal or financial advice. If you want to stay updated on Amazon changes, subscribe to our blog. If you need support with PPC, DSP, AMC, analytics, or a long-term growth strategy, contact the ANavigator team at info@anavigator.co  Book a call to get a FREE AUDIT using the link below:     Book a call – FREE AUDIT   Follow my Weekly Newsletter on LinkedIn:  / amazon-digest-for-brands-7232361008185372672   Follow me on LinkedIn:  / ookovalov  Follow ANavigator on social media:  / anavigator    /@anavigator_official  / anavigator7    / @anavigators     LinkedIn page to contact us:   Author: Oleksandr Kovalov Role: Founder & CEO @ ANavigator — The ANavigator Team

This week brought nine updates worth your attention, led by a new automated ad format in beta, tighter rules on selling or financing an Amazon account, and Amazon's move onto YouTube Shopping. Below, we break down what changed, how it works, and what to do about it. 📌 Contents Amazon Launches Full-Funnel Campaigns in Beta Amazon Tightens Seller Account Transfer and Financing Rules Amazon's Catalog Is Coming to YouTube Shopping Amazon Expands AI Prompts to Sponsored Brands Campaigns ChatGPT Ads Expand to 31 European Countries Amazon DSP Adds Automatic Deal Selection for Video Ads Amazon Lets Sellers Submit Bulk Compliance Testing Requests Amazon Ads Adds a Separate Ad Groups Tab Amazon Adds Two New Date Presets in Campaign Manager Amazon Launches Full-Funnel Campaigns in Beta   Amazon Launches Full-Funnel Campaigns in Beta Amazon opened a beta for a new ad format called Full-Funnel Campaigns, first announced at Unboxed last year. It runs display, video, and sponsored ads automatically to reach new customers and grow sales over time. Setup requires a campaign name, a minimum daily budget of 200 dollars, at least three products, a brand logo, and a headline, with an option to add an AI-generated video per product or skip video entirely. Once the campaign is live, you can still edit the daily budget, products, videos, and headline. You cannot control bids, placements, or targeting, since Amazon manages those automatically. Reporting inside the campaign is standard for now, covering cost, sales, ACOS, and long-term sales, with nothing format-specific yet. Given the lack of targeting and bid control, treat this as a test budget line rather than a core strategy until more data comes in. Read more here by Alexander Swade   2. Amazon Tightens Seller Account Transfer and Financing Rules Amazon's updated Business Solutions Agreement took effect on August 24 and adds new restrictions that affect sellers planning an exit or using financing tied to future Amazon payouts. Sellers can no longer transfer their rights or obligations under the BSA without Amazon's consent, and they are now prohibited from pledging those rights as collateral. The change reaches further than individual sellers, since it can also affect account sales, aggregator deals, and financing arrangements structured around future Amazon disbursements. If your business is negotiating a sale, renewing financing, or planning an exit that involves account transfers or future Amazon revenue, review the updated agreement now and get legal advice before signing anything. Acting before a deal closes, rather than after, is the difference between a clean transaction and a blocked one. Read more here by Ivan Marynych Amazon's Catalog Is Coming to YouTube Shopping Amazon is joining the YouTube Shopping affiliate program, opening its catalog to US creators who can now tag Amazon products directly inside their videos. YouTube frames this as a shift in how people shop: browsing videos instead of store windows, with the video player itself becoming a storefront. This adds a new discovery and conversion path that sits outside Amazon search, DSP, and existing affiliate channels. Brands with active creator partnerships or influencer programs are best positioned to benefit early, since they already have the relationships needed to get tagged. What is not yet clear is how attribution, reporting, and payouts will work for these tagged sales, so treat this as a channel to watch closely as it rolls out. Read more here by Travis Katz Amazon Expands AI Prompts to Sponsored Brands Campaigns Amazon has started adding AI shopping prompts to Sponsored Brands campaigns, extending a feature that previously only ran inside Sponsored Products. Amazon is also adding more prompts within existing campaigns over time, and prompt spend has climbed by more than double over the past few weeks alone, alongside a doubling in the number of prompts appearing inside campaigns. With Sponsored Brands now spending on prompts too, total spend in this area is set to increase further from here. Amazon continues to add new metrics to prompt and video reports, including Purchase Click Rate and CVR, which means the reporting itself is still evolving. The practical move is to check prompt and Sponsored Products video spend weekly and start building a strategy around what the data shows, rather than waiting for the format to settle. Read more here by Prem Gupta ChatGPT Ads Expand to 31 European Countries OpenAI has expanded ChatGPT ads into 31 European countries, its largest ad expansion to date. ChatGPT reaches 1 billion weekly users, and OpenAI says 20% of them already show buying intent, according to Adweek reporting from August 2026. Conversion optimization, geo-targeting, custom audiences, the OpenAI Pixel, a Conversions API, and third-party tracking are all live features now, and OpenAI says more than 1,000 brands are already advertising on the platform. Ads only appear to Free and Go plan users, while Plus, Pro, and Enterprise subscribers stay ad-free, and access currently runs through OpenAI's Ads Solutions team and agency partners rather than self-serve signup. This is not an Amazon update, but it matters to any brand managing paid budgets across channels, since it is a new line item to test and measure against existing Google and Meta spend. Read more here by Alex Stoykov Amazon DSP Adds Automatic Deal Selection for Video Ads Amazon DSP has added an automatic option for buying Streaming TV and Online Video ads, replacing the manual process of browsing and selecting deals one at a time. Deals are pre-negotiated placements across Amazon apps, Fire TV, Twitch, and other partner sites, and the new setting lets Amazon select them based on your budget, audience targeting, and campaign dates. The feature previously worked only in the US and now covers Canada, Mexico, Brazil, the UK, Germany, France, Italy, and Spain. You keep visibility and control, since every deal Amazon selects shows its name, price, and dates before the campaign goes live, and manual deal selection is still available alongside it. It remains in beta and currently applies only to awareness campaigns measured on reach, not to every video ad type. Read more here by Oleksandr Kovalov Amazon Lets Sellers Submit Bulk Compliance Testing Requests Amazon occasionally flags products and requires sellers to prove they pass safety or compliance testing through a Test Request Form, filed per ASIN. Until now, a seller with multiple flagged products had to submit a separate form for each one, one ASIN and one store at a time, which meant repeating the process across every marketplace they sold in. Since July 24, Amazon now allows sellers to submit TRFs for several flagged ASINs at once instead of one by one. A new dashboard also brings every compliance request into one place, filterable by ASIN, TRF ID, order ID, status, marketplace, or testing provider, and sellers running multiple stores in the same region can see requests across all of them together. Sellers active in several marketplaces get a direct cut in the repetitive paperwork tied to compliance. Read more here by Mila Dubykivska Amazon Ads Adds a Separate Ad Groups Tab Amazon Ads has added a dedicated Ad Groups tab to its console, separating it from the main campaign view. It is a small interface change, but one that makes campaign management and navigation noticeably easier day-to-day. The next commonly requested addition is a dedicated Search Terms tab, which is not part of this update. Update any internal training material or workflow documentation that references the previous navigation layout. Read more here by Mansour Norouzi Amazon Adds Two New Date Presets in Campaign Manager Amazon added two new date range presets in Campaign Manager: Last 12 Months and Quarter to Date. It is a minor change, but a useful one for teams that work inside the tool regularly for reporting. Amazon still does not offer custom date ranges that go back further than the available presets. If your team pulls recurring reports from Campaign Manager, check whether either new preset can replace a manual step in that process. Read more here by Isaac Gross That covers the nine updates we tracked this week, from a new automated ad format still finding its footing to smaller console changes that quietly save time. If you want this digest in your inbox every week, subscribe to the ANavigator Weekly Amazon Digest below. If you want to stay updated on Amazon changes, subscribe to our blog. If you need support with PPC, DSP, AMC, analytics, or a long-term growth strategy, contact the ANavigator team at info@anavigator.co  Book a call to get a FREE AUDIT using the link below:     Book a call – FREE AUDIT   Follow my Weekly Newsletter on LinkedIn:  / amazon-digest-for-brands-7232361008185372672   Follow me on LinkedIn:  / ookovalov  Follow ANavigator on social media:  / anavigator    /@anavigator_official  / anavigator7    / @anavigators     LinkedIn page to contact us:   Author: Oleksandr Kovalov Role: Founder & CEO @ ANavigator — The ANavigator Team