The Federal Trade Commission and a group of US states have sued Amazon over claims it overcharged advertisers by more than $20 billion since 2019, and the complaint says 1.2 million advertising customers were misled.
An advertising auction is supposed to settle at whatever bidders will pay. Spencer Soper said the government's case is that Amazon decided in advance what a slot was worth and made that number the level the bidding had to reach.
"And what the FTC alleges is that Amazon kind of just decided this is what this advertisement should be valued at. And that created kind of like a floor where the bidding ultimately had to cross."
Soper leads Bloomberg's coverage of Amazon, and the numbers he gave for the advertising business are the reason the case matters to the stock rather than to the shopper.
I listened to the full segment so you can skip it.
Here are the 3 takeaways that matter.
👤 Guest: Spencer Soper, who leads Bloomberg's coverage of Amazon
🎙️ Host: Ed Ludlow, who anchors Bloomberg Tech from San Francisco
📰 Published: 1 September 2026 on YouTube (Bloomberg Tech)
🔴 YouTube | 🟣 Apple Podcasts | ⏱️ 4 min
Key Takeaways
The FTC's case is that Amazon put a price floor under an auction that was supposed to be open The complaint covers more than $20B of alleged overcharging since 2019 across 1.2M advertisers
Amazon's defense is that the price advertisers pay per click has been flat after inflation It also says conversion rates have risen, so buyers are getting more for the same money
Advertising is a small share of Amazon's revenue and a large share of its profit Soper put it at $60B a year, earned without warehouses or delivery costs behind it
1. The Synthetic Price
Ludlow asked Soper to start with the basic allegation the government is making.
The mechanism at issue is a search-term auction. Soper said advertisers bid against search terms — someone searches for a phone charger, and several bidders compete to be the featured listing shown against it, which he called very valuable real estate "And so that's supposed to be done on an auction where people are bidding against that search term."
The FTC says Amazon introduced a synthetic price that inflated what advertisers ultimately paid, according to Soper's account of the complaint
The alleged effect was a floor rather than an open clearing price. "And what the FTC alleges is that Amazon kind of just decided this is what this advertisement should be valued at. And that created kind of like a floor where the bidding ultimately had to cross. And that inflated the value of the advertising and led to more than 1.2 million advertisers being overcharged over several years."
Ludlow said the complaint was filed on Monday in Seattle federal court and alleges more than $20 billion of overcharging since 2019
2. Amazon's Defense
Ludlow read Amazon's emailed response on air and asked Soper what the company is disputing.
Amazon's first move is to point at shoppers rather than advertisers. Its statement said the lawsuit presents no evidence of harm to shoppers, and characterized the FTC's claim as one about advertisers who "didn't understand how our auction worked and therefore overpaid."
Soper's summary of the position is that nothing is broken. "Yeah, I mean, Amazon's basically saying that the market is working fine."
The company's evidence is a price series and a conversion series. Soper said Amazon argues the cost per click has been roughly flat once inflation is taken into account, and that conversion rates — the share of people who see an advertisement and go on to buy — have risen over the same period The conclusion Amazon draws, as Soper put it, is that advertisers are getting better value rather than being overcharged
3. Why the Ad Business Matters
With about 30 seconds left, Ludlow asked whether advertising is an important business for Amazon.
Soper's answer separated revenue from profit. "Oh, absolutely. It's $60 billion a year, not a huge number revenue side, but huge profitability side."
The margin comes from what the business does not require. Selling and delivering goods means warehouses and vehicles and is expensive; the advertising sits on top of an operation that already exists. "They've been able to build this advertising layer on top without all of those assets needed, and it's incredibly profitable for Amazon."
Bonus Insights
Ludlow opened the block with a separate Amazon item: YouTube has made Amazon its newest affiliate partner in YouTube shopping, letting creators tag Amazon products in videos and live streams and take a cut of the resulting sales
He framed that as part of YouTube prioritizing e-commerce as one of its next large bets
Soper's bottom line is that the FTC is attacking the pricing mechanism inside Amazon's most profitable business, and that the company's answer is a price-and-conversion argument rather than a defense of the auction's design.
Products, Companies & Tools Mentioned
Amazon (The defendant; Soper said its advertising business runs at $60 billion a year and carries margin that the retail operation does not)
Federal Trade Commission (Filed the suit on Monday in Seattle federal court with a group of US states, alleging more than $20 billion of overcharging since 2019)
YouTube (Named Amazon its newest affiliate partner in YouTube shopping, letting creators tag Amazon products for a cut of sales)
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