Australia's competition regulator has sued Amazon.com Inc., alleging the e-commerce giant used unfair subscription terms to force more than one million annual Prime members to either watch advertisements on Prime Video or pay extra to remove them. The Australian Competition and Consumer Commission (ACCC) claims Amazon relied on unfair contract terms between November 2023 and August 2025 to alter the conditions of its Prime Video service, impacting consumers who had already paid for annual memberships.

Allegations of Unfair Contract Terms

The ACCC alleges that Amazon introduced advertisements on Prime Video in July 2024. Following this change, annual Prime subscribers were required to either accept the ads or pay an additional AU$2.99 per month for an ad-free experience. The regulator contends that customers who chose to cancel their annual Prime memberships due to this change were not entitled to refunds for the unused portion of their subscriptions.

Regulatory Action and Response

Proceedings have been filed in the Federal Court. The ACCC is seeking penalties, consumer redress, legal costs, declarations that the contract terms were unfair, and additional court orders to address the alleged conduct. ACCC Chair Gina Cass-Gottlieb stated that Amazon Australia included multiple unfair terms in its contracts with Australian annual Prime subscribers and relied on these terms to implement ads on Prime Video. The investigation began after receiving consumer complaints regarding the ad rollout.

In response, an Amazon spokesperson stated that the company is reviewing the case filed by the ACCC in detail. Amazon emphasized that it has cooperated with the ACCC throughout its investigation and remains focused on providing the best experience for its Australian customers.

Amazon.com, Inc. is on track to become the first company to generate $1 trillion in annual revenue by 2028, according to Futurum Equities Chief Market Strategist Shay Boloor. The projection relies on Amazon's diversified business model, which Boloor describes as one of the most important infrastructure companies in the world, compounding across commerce, cloud, logistics, ads, and artificial intelligence (AI) simultaneously.

Business Drivers and AI Investments

The bullish outlook underscores growing optimism regarding Amazon's expanding AI initiatives, Amazon Web Services (AWS) cloud business, advertising segment, and logistics network. These sectors are expected to drive rapid revenue growth over the next several years. In support of this expansion, Amazon plans to invest about $200 billion in capital expenditures in 2026. This spending is supported by major customer commitments, including more than $100 billion from OpenAI.

Custom Chip Performance

Amazon's custom chip business, led by Graviton and Trainium, has surpassed a $20 billion annualized revenue run rate. The segment is growing at triple-digit rates, with the company anticipating lower costs and higher margins over time.

First Quarter Performance

In April, Amazon reported financial results for the first quarter that exceeded Wall Street expectations. The company posted revenue of $181.52 billion against analyst estimates of $177.30 billion. Earnings per share were $2.78, significantly higher than the consensus forecast of $1.66 per share.

Amazon shares gained 2.5% to close at $232.69 on Friday. Over the past five years, the stock has gained more than 32%.