Australia lawsuit against Amazon intensifies company’s legal backlash over advertising

At a glance:

• Australia's ACCC sues Amazon Australia over allegedly unfair Prime contracts that let the company add ads and then charge more for an ad‑free experience.
• The U.S. FTC is reportedly preparing a case accusing Amazon of running opaque marketplace ad auctions that may cause sellers to overpay.
• Amazon earned $68 billion in ad revenue last year, was the world's top advertiser in 2025, and the five biggest tech firms now capture two‑thirds of global ad spending.

Australian regulator accuses Amazon of unfair contract changes

The Australian Competition & Consumer Commission (ACCC) has filed a lawsuit claiming that Amazon Australia's Prime contracts from 2023 to 2025 were unfair because they permitted the company to make unilateral negative changes without giving customers any recourse. When Amazon rolled out ads on Prime Video in 2024, the suit argues that the contract language enabled Amazon to force existing ad‑free subscribers onto a higher‑priced tier if they wanted to avoid commercials. The ACCC also alleges that Amazon's U.S. parent was knowingly involved in the Australian subsidiary's conduct, expanding the potential liability beyond the local entity.

The case centers on the principle that consumer contracts must not allow one party to degrade the service and then charge extra to restore the original experience. If the court agrees, Amazon could face penalties and be required to rewrite its Prime terms for Australian users. The outcome may also set a precedent for how streaming services worldwide structure ad‑supported tiers.

U.S. Federal Trade Commission reportedly preparing marketplace ads case

Anonymous sources suggest the Federal Trade Commission is building a complaint that Amazon's marketplace ad auctions are deceptively opaque, preventing sellers from seeing how many competitors are bidding for the same search placement. This lack of transparency could tempt merchants to bid higher than a fair market price, effectively inflating Amazon's ad revenue at the expense of third‑party sellers. The FTC's interest signals a broader scrutiny of how dominant platforms monetize their own marketplaces.

Should the FTC move forward, the case could compel Amazon to disclose auction dynamics, implement clearer pricing rules, or even restructure its advertising marketplace. Sellers and advertisers are watching closely, as any remedy would directly affect their cost of acquisition on the world's largest e‑commerce platform.

Amazon's advertising dominance and financial scale

Amazon generated $68 billion in advertising revenue in the most recent fiscal year, underscoring its transformation into a major media owner. In 2025 the company also ranked as the world's largest advertiser by total spend, according to Ad Age, meaning it both sells and buys ads at massive scale. This dual role gives Amazon unique leverage over pricing and inventory across its own properties and third‑party sites.

The five biggest tech firms — Amazon, Meta, Alphabet, Microsoft, and TikTok — together capture roughly two‑thirds of global advertising revenue, per a MoffettNathanson report from last year. That concentration raises questions about market power, data advantages, and the ability of smaller publishers to compete. Regulators in multiple jurisdictions are now examining whether such dominance harms competition and consumer choice.

What to watch next

The ACCC lawsuit will proceed through the Australian Federal Court, with a potential ruling that could force Amazon to compensate affected Prime members and amend its contract terms. Observers expect a decision timeline of 12 to 18 months, though settlements are common in consumer‑law cases. Any remedy may include refunds, contract revisions, or fines calibrated to Amazon's Australian revenue.

In the United States, the FTC's investigation remains under seal, but public filings or a formal complaint could appear later this year. A parallel congressional hearing on digital advertising transparency may add political pressure. The combined regulatory momentum suggests Amazon's advertising practices will face sustained legal and policy challenges across major markets.

Sellers, advertisers, and Prime subscribers should monitor these developments, as outcomes could reshape pricing, transparency, and the balance of power between platforms and their users. Companies that rely heavily on Amazon's ad ecosystem may need to diversify their marketing spend or negotiate new terms in anticipation of regulatory reforms.