ACCC sues Amazon over introduction of ads on Prime

Amazon is facing a significant legal challenge in Australia, where the Australian Competition and Consumer Commission (ACCC) has filed a lawsuit against the company for introducing advertisements to its Prime Video service. The case, now heading to the Federal Court, marks another step in the ACCC’s ongoing efforts to hold large corporations accountable under Australian consumer law. The dispute centers around whether Amazon violated its contractual obligations by altering the terms of its Prime subscription without adequately compensating affected users.

According to the ACCC, Amazon Australia implemented several unfair contract terms between November 2023 and August 2025, which gave the company broad authority to unilaterally modify its services. One of these terms was used to introduce advertisements to Prime Video in July 2024. At the time, Prime Video had been largely ad-free, and many subscribers had opted for annual subscriptions that included this feature. With the introduction of ads, Amazon began charging an additional A$2.99 per month to retain ad-free access, effectively increasing the cost for existing subscribers. Over 850,000 Prime subscribers were impacted by this change, leaving them with a degraded viewing experience unless they paid extra.

The ACCC alleges that Amazon did not provide these subscribers with a pro rata refund or any meaningful compensation for the reduced service quality. Furthermore, the commission claims that consumers who wished to cancel their subscriptions were not given appropriate options for partial refunds, further exacerbating the perceived unfairness of the situation. The ACCC argues that these actions constitute a breach of the Australian Consumer Law, which prohibits unfair contract terms that unfairly disadvantage consumers.

The lawsuit also extends beyond Amazon Australia, as the ACCC asserts that Amazon US played a role in the decision to introduce ads globally and assisted in implementing the policy within Australia. This claim adds complexity to the case, as it implies that the U.S.-based parent company may share responsibility for the alleged misconduct. The ACCC has previously targeted Amazon in other cases, including a recent lawsuit over the sale of children’s backpacks that failed to meet safety regulations. These repeated legal actions suggest a broader strategy by the ACCC to scrutinize major tech firms operating in Australia.

Amazon Australia has responded to the allegations by stating that it is reviewing the case and has cooperated with the ACCC throughout its investigation. The company emphasized its commitment to providing a good customer experience for Australians. However, the ACCC is seeking substantial penalties, potentially reaching up to A$50 million or calculated based on the benefits gained from the alleged misconduct. The outcome of this case could set a precedent for how consumer protection laws apply to digital services and subscription models.

Legally, the case presents challenges due to the nature of the contract terms Amazon employed. Unilateral variation clauses—allowing suppliers to alter service conditions without prior agreement—are often considered inherently unfair. While the ACCC has long advocated for stronger consumer protections, its own guidelines suggest that contracts should allow for termination without penalty if a unilateral change is made. This apparent contradiction may serve as a defense for Amazon, arguing that its practices align with the ACCC’s own recommendations.

As the case moves forward, it will likely draw attention not only from legal experts but also from consumers and industry stakeholders. The resolution could influence future regulatory approaches to digital platforms and subscription-based services, shaping how companies interact with their users in the evolving landscape of online entertainment.