Amazon Faces $1.3 Billion Penalty Threat for Prime Video Ads

The Australian Competition and Consumer Commission (ACCC) is taking Amazon to court over its introduction of ads on Prime Video for customers who had already paid to avoid them. ACCC chairwoman Gina Cass-Gottlieb is seeking a “significant penalty” that could reach up to $1.3 billion, based on Amazon's Australian revenue.

“We will look for a penalty that is significant in the context of Amazon’s business in Australia, so it’s not simply a cost of doing business in Australia, it is a true deterrent,” Cass-Gottlieb said.

The Case

• Amazon introduced ads on Prime Video in Australia in July 2024, requiring subscribers to pay an extra $2.99 per month to remove them.
• The ACCC argues this is an unfair contract term, as customers who paid upfront for an ad-free experience were later forced to pay more or endure ads.
• This is the second action under the ACCC's new powers to investigate unfair contract terms, and the most significant to date.

Potential Penalty

The ACCC is suing Amazon Commercial Services, which posted $3.8 billion in revenue in the 2024 calendar year. A penalty of up to one-third of gross revenue could mean a fine as high as $1.3 billion. The regulator is also seeking declarations, consumer redress, and legal costs.

Amazon's Response

A spokesman for Amazon Australia said the company is reviewing the case and has cooperated with the ACCC throughout its investigation. They remain focused on providing the best experience for Australian customers.

Background

• Prime Video launched in Australia in 2018 and now has over 5 million subscribers, making it the second-largest streaming platform behind Netflix.
• Major streaming platforms like Disney+ have also introduced cheaper, ad-supported tiers as subscriber growth slows.
• Amazon updated its contract terms multiple times during the ACCC's investigation, but the regulator deemed the changes insufficient.

What's Next?

The case covers the period from November 1, 2023, to August 18, 2025, as Amazon made a final change to guarantee pro rata refunds on August 19, 2025. The outcome could set a precedent for how global tech companies operate in Australia.