Attorney General Charity Clark’s office announced the filing Monday afternoon. The businesses at the center of it are the ones that sell things on Amazon — more than a million brands and sellers nationally, over 500,000 of them small or mid-sized.
“Manipulating or misleading businesses into spending more than they should on advertising is deceitful and unlawful,” Clark said in the release.
How the auction was supposed to work
Every time a shopper searches Amazon for, say, maple syrup, the sponsored listings at the top of the results have been bought at auction. Sellers bid on the keyword, and the highest bidder wins the spot.
Amazon told advertisers for years that it ran a second-price auction: the winner pays a penny more than the next-highest bid, not their own bid. If you bid $2.00 and the next seller bid $1.50, you pay $1.51. That format is the industry standard, and the reason it matters is that it changes how a business bids. Knowing you’ll only pay what it takes to beat the next guy, you bid what the click is honestly worth to you. In the other kind of auction, where the winner pays their full bid, sellers learn to bid low and creep up, because overbidding costs them real money.
The complaint alleges Amazon changed the rules in 2019 and didn’t say so. It added an undisclosed floor to the auctions — a minimum price Amazon set itself, called internally a “soft reserve.” Amazon knew what everyone else had bid, and the floor functioned as a bid from a participant Amazon had invented. Under the auction’s own rules, that pushed the winner’s price up toward their full bid.
The FTC’s account of the complaint quotes notes from a 2024 discussion among senior Amazon executives calling it a “clever non-transparent way to charge first price” and an effective way to drive revenue.
How much of the time
The share of Sponsored Products advertisers who ended up paying their own full bid ran between 30% and 40% in 2021, according to the complaint. It hit 70% in 2022 and roughly 80% by 2024. Sellers kept bidding as though they were in the old auction, because as far as they knew they were.
What it works out to
The complaint puts advertiser harm above $20 billion, according to the Wall Street Journal; the FTC’s own release says only that Amazon likely extracted tens of billions of dollars. Spread across the million-plus advertisers named, $20 billion averages roughly $20,000 apiece over seven years, or about $8 a day — though the real distribution is nothing like even, and national brands absorbed far more of it than a two-person operation in Vermont did.
The figure a small seller would actually feel is different. The complaint says Amazon raised prices on ordinary days and raised them much harder on Prime Day and Black Friday, ramping the surcharges up gradually so the increase wouldn’t be noticed. The Journal reports the FTC puts the increase in the cost of a single ad click at 50% on those days. Sellers pay per click. For a Vermont business that budgets its advertising around the two weeks of the year that matter most, that is the number.
Amazon does not publish how many Vermont businesses sell in its store. Outside commercial estimates put the count in the several hundred. What Amazon does say is that advertising is one of the main tools it sells its independent sellers to grow with.
Amazon’s answer
The company says it described its auctions to advertisers accurately, and that improvements to its ad technology over the years delivered more relevant ads and made advertising more valuable to the businesses buying it. Its position is that the floor sets a “real-time minimum value” reflecting what a given ad slot is actually worth, that advertisers never pay more than they bid, and that the practice is common across the advertising industry. Amazon also says its auction systems saved advertisers $8 billion between 2021 and 2025 rather than costing them money.
Does it reach the shopper
This is the part that decides whether the case matters to Vermonters who have never sold anything online, and the two sides are flatly opposed. FTC Chairman Andrew Ferguson said the higher advertising costs were largely passed along to American consumers. Amazon says its advertising practices had no impact on consumers at all.
The complaint’s argument is that advertising costs stack on top of the account, referral, storage and fulfillment fees sellers already pay, squeeze their margins, and end up in the price on the product page. Neither side has put a number on what that would mean for a single order. Sellers, for their part, have been complaining about rising Amazon advertising costs for a while; earlier this year some larger merchants pulled their ad spending in protest.
If you sell on Amazon
The alleged conduct runs from 2019 forward and covers Sponsored Products, Sponsored Brands and display ads.
Your own advertising reports show cost-per-click by day, which is where a Prime Day or Black Friday spike would appear.
The case is at its start. No court has found Amazon did anything wrong, and there is no process yet for an advertiser to recover anything.
What Vermont is asking for
The filing seeks a permanent injunction, a monetary judgment and other relief. The FTC alone can stop conduct going forward; the states are the ones with the authority to seek civil penalties and to try to claw money back for businesses in their own borders. How much of that reaches Vermont depends on a judgment that is years away, if it comes at all.
This is the third major federal case against Amazon in three years, after the $2.5 billion settlement last year over Prime sign-ups and cancellations, and a monopolization suit headed for trial next year. Amazon’s advertising business took in more than $68 billion in 2025, third in the world behind Google and Meta.