On August 31, 2026, the Federal Trade Commission and 22 state attorneys general sued Amazon over how its ad auctions set prices. The FTC complaint alleges that from 2019 Amazon added an undisclosed surcharge, internally called a soft reserve price, to auctions it described as second-price, so advertisers paid more than the auction itself would have set.
The case covers Sponsored Products, Sponsored Brands, and Display ads, and CNBC reported that it was filed in the Western District of Washington. Amazon disputes every core claim, the case is ongoing, and nothing has been proven in court.
Then, on September 29 at unBoxed, Amazon renamed its ad platform Amazon Ads Agent and gave its AI a larger role in bids, budgets, and targeting. October opens with two questions for every amazon ppc strategy: what are clicks really priced at, and how much of that decision do you want to delegate?
Whatever the court decides, the lawsuit has already done one useful thing. It has made every advertiser look at the gap between their bid and what they actually pay.â Mark Daniel Zalomajev, Founder, INNELS
The allegation centres on how often advertisers paid their own bid. According to the complaint, Sponsored Products advertisers paid their full bid 30 to 40 percent of the time in 2021, about 70 percent in 2022, and roughly 80 percent by 2024. Reporting on the filing says the practice began in Sponsored Brands in late 2018, reached Sponsored Products in mid-2019, and extended to Display in 2023.
Amazon's response is just as specific. The company called the suit misguided, said advertisers adjust bids based on real-world performance rather than auction descriptions, and stressed that no advertiser ever pays more than their bid. It also argues that inflation-adjusted CPC was flat, and that its auction saved advertisers roughly $8 billion between 2021 and 2025.
What neither side has answered publicly is whether soft reserves are still active today and at what level. Ad Badger points out that defending reserve prices as industry standard is a defence of the practice, not a retirement of it, so advertisers should assume current pricing mechanics are unchanged.
The unBoxed announcements land on top of that. Amazon Ads Agent now offers AI-powered recommendations for Sponsored Products targeting, bids, and budgets that apply in one click, and MediaPost reports three core campaign types sit beneath it: Sponsored Ads, DVA+, and Full-Funnel Campaigns.
Full-Funnel Campaigns, in open beta in the US, let an advertiser set one budget and allow Amazon's AI to handle targeting, creative, and pacing across sponsored and display inventory. Digiday notes that control and the rationale behind automated decisions are now the central questions, and that Amazon is building explanations for why its recommendations are made.
Amazon is asking for more trust in its algorithm in the same quarter its pricing is in court. Sellers do not have to pick a side to see why verification matters more now.â Mario Reambonanza, PPC Manager, INNELS
Across the accounts we manage, the most common finding after the lawsuit headlines was simple: on mature exact match terms, actual CPC sits very close to the maximum bid. Many teams had set bids high on the assumption that the auction would discount them, and that assumption has been quietly inflating amazon ppc cost on their most important keywords.
Accounts that bid from unit economics were least exposed. Where every keyword bid traces back to price, conversion rate, and target ACoS, the auction mechanics matter less, because the bid already reflects what a click is worth to the business rather than what it might cost.
We also see a growing share of bid changes coming from platform recommendations accepted without a margin check. Those suggestions optimise for delivery and sales volume, which is not the same objective as contribution profit on a SKU carrying high FBA and referral fees.
Treat your max bid as the price you will pay, not the ceiling you hope to stay under. Accounts that made that switch found savings in a week.â Niks Saknitis, PPC Manager, INNELS
At INNELS, we read this as a bidding discipline problem rather than a legal one. Sellers cannot change how the auction prices clicks, but they control the number they submit, and that number should come from break-even CPC calculated per SKU Margin, performance and goals, not from suggested bid ranges or competitor guesswork.
We also think the AI tools deserve a fair test rather than blanket rejection. Commentators reviewing the case note that reserve prices and dynamic pricing are not unfair in themselves, and the same is true of automation. The test is whether a recommendation improves margin in a controlled comparison, and that is measurable.
Our approach is to run one-click recommendations in a held-out set of campaigns, keep a manual control group on the same products, and judge both on contribution margin after we accumulate enough data. Automation earns budget by proving it, the same as any other campaign.
We do not ask whether AI bidding is good. We ask whether it beat our control group on profit and goals then we let that answer decide the budget.â Mario Reambonanza, PPC Manager, INNELS
Start with a bid-to-CPC review. Pull your top spending keywords and compare average CPC with the maximum bid on each one. Where the two are nearly identical, test a measured bid reduction on proven exact match terms and watch whether impressions and conversions hold.
Next, rebuild break-even CPC by SKU using current price, conversion rate, and target ACoS. Any bid above that figure is spending margin to buy volume, which can be a valid choice for launches or ranking pushes but should always be a deliberate one.
Watch CPC trends through October and into Black Friday rather than assuming last year's curve will repeat. The complaint alleges surcharges were ramped ahead of high-volume days, so daily CPC monitoring by keyword is the only way to see whether Q4 pricing moves faster than your bids.
Finally, keep your invoices and campaign reports organised. The FTC and the states are seeking remedies for advertisers, and while no outcome is certain, clean records cost nothing. For anything beyond that, take advice from a qualified lawyer.
Bid from margin, verify the CPC, and test the automation before you trust it. That is the whole Q4 checklist in one line.â Niks Saknitis, PPC Manager, INNELS
INNELS is a marketplace consultation agency that builds amazon ad management around unit economics. Our amazon ppc management service covers bid modelling by SKU, CPC-to-bid analysis, controlled testing of Amazon Ads Agent recommendations, and Q4 budget planning.
If you want a second opinion before Black Friday, an amazon ppc audit gives you a keyword-level view of where you pay your full bid, a break-even model you can run yourself, and a test plan for automation, with no obligation to change amazon consultant or agency.
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