Three weeks before Black Friday, the Federal Trade Commission handed every Amazon advertiser a reason to reread their own bid sheet. On November 5 the agency and 22 state attorneys general filed an updated complaint with the black bars removed. The newly visible passages allege that Amazon raised ad prices by as much as 50% above the auction result on ordinary days and by as much as 250% on Prime Day, Black Friday and similar peak days.
Every one of those numbers is an allegation. Nothing has been tested in court, and Amazon denies deceiving or harming anyone. But you do not need a verdict to change how you bid. Read the FTC’s account and Amazon’s defence side by side and they agree on the one fact that matters for your Q4 plan: on Amazon, the maximum bid you type in is very often the price you pay. Plan Black Friday as if it always is.
What the unsealed complaint says
The case itself is not new. The FTC and its state partners sued in August in the Western District of Washington, claiming Amazon told advertisers its sponsored ads ran on a second price auction, where the winner pays roughly what it takes to beat the runner up, while quietly adding what Amazon internally called a “soft reserve” price. In the FTC’s telling, that reserve was calculated after the auction picked a winner and replaced the competitive price whenever it was higher. The complaint covers roughly 1.2 million advertising customers and estimates more than $20 billion in overcharges since 2019.
What changed on November 5 is that the size and the dates came out from under the redactions. According to the FTC’s summary, as reported by Search Engine Journal and Relevant Audience, the newly public allegations include:
- During the 2021 holiday season, average cost per click rose 20%, and some advertisers saw increases above 200%.
- During the 2022 holiday season, Amazon raised its surcharges to bring in an extra $87 million worldwide.
- On Prime Day 2023, one large food and beverage advertiser faced price increases above 100%, and Amazon acknowledged internally that the hit to that advertiser’s return on ad spend was “destroying campaign performance.”
- In 2023, executives looked for an extra $40 million to close a gap to plan, with the head of Amazon Ads writing that “whatever can be done with reserves (ideally at least $40MM would be helpful).”
The quote that will travel furthest in agency Slack channels is the one about what advertisers were told. Per the complaint, an advertiser asked whether “something has changed with respect to the second price auction process, either by design or mistake.” The account manager’s answer: “there is not a bug, or a change in auction style, so no worries there. This year the marketplace is even more crowded than any year previous, and we are seeing the spike in CPCs as a direct reflection.” The FTC calls that answer false. That is the agency’s position, not a finding.
One more number from the original filing frames everything else. The FTC alleges the share of Sponsored Products clicks where the winner paid its own full bid went from roughly 30 to 40 percent in 2021 to about 80 percent in 2024, according to USA Today’s reading of the complaint. If that holds, four out of five winning clicks were not priced by the runner up at all.
What Amazon says, and why it lands in the same place
Amazon’s August response, summarised by Search Engine Journal and Value Added Resource, calls the suit misguided. Its argument runs like this. Amazon ranks ads by bid and predicted relevance, so a lower bid can beat a higher one. About 92% of Sponsored Products ads selected in 2024 did not carry the highest bid. That left premium placements selling below what Amazon considered their value, so it added soft reserves, which it says are common across digital ad auctions. If a winning bid clears both the hard and soft reserve, the advertiser pays the soft reserve. If it clears the hard reserve but not the soft one, the advertiser wins and pays its own bid. Either way, Amazon says, nobody pays more than the maximum they entered, and its campaign console has said since 2018 that a bid is a maximum.
Amazon also brings its own data: average winning bids on Sponsored Products search ads down 50% from 2019 to 2025, average cost per click flat after inflation from 2019 through 2024, conversion rates up 24% from 2021 to 2025, and an estimated $8 billion saved by advertisers between 2021 and 2025 because relevance outranks raw bid. It says advertisers bid on outcomes like clicks, sales and return on ad spend, not on descriptions of auction mechanics, and that it has updated its help pages to disclose reserve pricing.
Those two stories can both be partly true, because they measure different things. A six year, inflation adjusted average across every click can sit flat while specific advertisers on specific days take the spikes the FTC describes. A court will sort out who misled whom. What neither side disputes is the mechanism. Under Amazon’s own description, once a soft reserve is in play you pay either the reserve or your full bid. The runner up’s bid stops being your price. Your ceiling becomes the number that decides what you spend.
That is the bit marketers can use today. It does not depend on whether Amazon broke the law. It depends only on how the auction works, and on that point the defendant and the regulator are describing the same machine.
Why Black Friday is the week this bites
Peak days are where the alleged surcharge ran hottest, up to 250% above the auction result in the FTC’s account. They are also where most brands loosen their grip. Rules that raise bids automatically when impression share drops, portfolio caps lifted for the week, “just win the slot” instructions to the junior buyer at 7 a.m. on Black Friday. All of that habit was built on a second price mental model, where a high bid is insurance you rarely pay out on. If your bid is the price four times out of five, a high bid is not insurance. It is the bill.
Now add the reporting gap. Campaign reports show what you paid and what you sold. They do not show what the second place bid was, or whether a reserve set your price. The FTC quotes an internal Amazon description of its aggregated price reporting as “opaque.” Amazon disputes the characterisation of its auction, but nobody claims you can see the runner up’s bid from the console. So when CPCs jump on Black Friday, you cannot tell from Amazon’s reports alone whether you got outbid by a competitor or priced by a reserve. The only defence is your own record of what you bid and what you were charged, kept somewhere Amazon does not control.
This is not just a story about the past. The FTC’s newest examples run from 2021 to 2023, and the August filing quotes a 2024 executive discussion. Neither the release nor Amazon says reserves have gone away. Amazon says it updated its disclosures, which tells you the mechanism is still a live part of how prices get set.
Why it matters beyond Amazon
Retail media budgets have grown up inside closed auctions where one company sells the inventory, runs the auction, writes the bidding tools and reports the results. That structure is not illegal, and nothing in this case alleges that Walmart Connect, Instacart, Criteo, Google or Meta behave the way Amazon is accused of behaving. But the case shows what an advertiser cannot see inside any closed auction, and how long a pricing change can sit inside a number you thought you understood. As June Cheung of Apostra put it to Campaign, the question is how much transparency you get “from any platform that controls the auction, sets the pricing rules and reports on performance.”
For brand and growth leads, there is also a planning trap. If your 2027 targets are built off year over year comparisons that include the 2021 to 2023 peak seasons, and the FTC is right, your baseline has a surcharge baked into it. Teams that blamed themselves or their agency for ugly Prime Day 2023 numbers may have been grading their own work against a price they never saw being set.
What to do this week
Reprice your peak bids from margin, not from last year. For every Black Friday and Cyber Monday campaign, set the max bid at the cost per click you are genuinely willing to pay on that day, worked back from contribution margin and conversion rate. Assume you will be charged it. If a bid only looks sensible because you expect to pay less, lower it.
Cap the robots. Look at every automated rule, portfolio and third party bid tool that can raise bids during the event. Put a hard ceiling on each one, in money, for November 27 through December 1. A rule that adds 50% to win impression share was a hedge under a second price model. Under this one it can be a direct 50% price increase.
Track charged CPC against bid, daily. Pull bid and actual cost per click at keyword or target level every day from now through Cyber Monday, and watch the ratio. A CPC trend on its own is hard to read. A ratio drifting toward 100% means your bid, not the competition, is setting your price. Do this only where you control the bid; automated strategies hide it.
Write down every explanation. When a rep or support ticket explains a cost spike as competition, save the message with the date and the campaign. The account manager quote in this complaint is the reason. It costs nothing and it is the only record you will have later.
Rebase your history. Flag the 2021 holiday, 2022 holiday and Prime Day 2023 windows in your reporting and stop using them as clean benchmarks for 2027 planning. Brief clients or finance on why, using the FTC’s own summary and Amazon’s response, so nobody hears it first from a headline.
Hold back a test cell. Keep a slice of Black Friday budget for a deliberate low bid test on a few high volume terms. If you win a useful share of clicks at a bid you can live with, you have learned how much of your usual price was reserve rather than rivalry. That is worth more than the extra sales the slice might have bought.
The court case will take years. Your Black Friday bids go live in less than three weeks. On Amazon, the number in the bid box is the number that decides what you spend. Price it like a bill you already know you will pay.
