I called Amazon's ad model "extortion with extra steps" last year. Turns out I w
By brandonfishman · September 9, 2026 · Curated by George's Blog
I called Amazon's ad model "extortion with extra steps" last year. Turns out I was being generous. The FTC just accused Amazon of secretly rigging its own ad auction for 7+ years, squeezing more money out of every seller.
Amazon runs a second-price auction for Sponsored Product ads. You bid, and if you win, you're supposed to pay one penny more than the next highest bid. That's supposed to keep it fair.
The FTC says Amazon broke that in 2019. They built in a fake bidder and never told anyone. So even when the real competition was weak, that phantom bid could push you all the way up toward your own bid.
The result: you pay more than any real competitor was willing to.
If this is true, it explains what I've seen the last two years. Clicks that used to run 20, 30, 50 cents are $5 to $10 now in a lot of categories. Nobody could ever tell us why.
That's exactly why we've been pushing clients toward TikTok, YouTube, and creator-led content as top-of-funnel channels. Build awareness where it's cheap and let branded search on Amazon close the sale.
We'll be watching this one. More to come as it plays out.