In July 2024, Amazon introduced advertising to Amazon Prime Video in Australia and required annual subscribers who wanted to keep ad-free streaming to pay an additional A$2.99 per month, despite their having already paid A$79 upfront for a Prime subscription that included the service.[1] On June 29, 2026, the Australian Competition and Consumer Commission (ACCC) commenced Federal Court proceedings against Amazon Commercial Services Pty Ltd, alleging that its Prime contracts with more than one million annual subscribers contained five unfair contract terms that let it make such negative changes unilaterally during the contract period without offering subscribers a remedy.[2][1] The ACCC also alleges that Amazon.com Services LLC was "knowingly concerned" in the conduct, and is seeking declarations, penalties, consumer redress, costs, and other orders.[1]
Background
editAmazon launched its Prime subscription service in Australia in June 2018.[1] Subscribers enter into a contract with Amazon Commercial Services Pty Ltd (Amazon AU) through a standardised online sign-up process, at a price of A$9.99 each month or A$79 for a 12-month subscription paid upfront.[1] The subscription bundles several benefits, including access to the Prime Video streaming service alongside delivery and shopping benefits.[1] Both Amazon AU and Amazon.com Services LLC (Amazon US) are owned by the US entity Amazon.com, Inc.[1] Writing in The Conversation, University of Melbourne law professor Jeannie Marie Paterson noted that Prime Video is Australia's second most popular streaming service, behind Netflix.[3]
The 2024 ad insertion
editAccording to the ACCC's concise statement, Amazon AU announced on September 22, 2023 that it would introduce advertisements to Prime Video movies and television shows in Australia in 2024. The ACCC pleads that on May 21, 2024, Amazon notified subscribers that the change would take effect on July 2, 2024 and that continuing to watch ad-free would require an additional A$2.99 per month.[2] Before that date, the ACCC alleges, almost all Prime Video content had been delivered "advertisement-free."[2] Annual subscribers had already paid A$79 upfront for a Prime subscription that included the service.[1] The ACCC says it investigated Amazon AU's contracts after receiving consumer reports about the introduction of the ads in 2024.[1]
The ACCC's concise statement alleges that as of July 2, 2024, more than 850,000 Prime subscribers had paid an annual fee for a subscription that included Prime Video, more than 600,000 of whom had subscribed or renewed since November 9, 2023.[2] Writing in The Conversation, Paterson said those subscribers were left with "a degraded Prime Video service for the balance of their subscription," and that consumers who chose to cancel were not offered "a pro rata refund or other meaningful redress."[3]
The Australian rollout followed a change in the United States, where Amazon introduced ads to standard Prime Video in 2024. American members could opt out of the ads only by paying an additional US$2.99 per month on top of the annual US$139 Prime fee.[4] Amazon's approach differed from Netflix, which added a lower-priced ad tier while keeping its ad-free plans. Netflix co-CEO Greg Peters said in 2024 that the company had considered making ads the default, but chose not to, citing its "long history of not having ads" and a preference not to force members "into a change and get them mad."[4]
ACCC Federal Court action
editThe ACCC filed its concise statement in the Federal Court of Australia's Victoria registry on June 29, 2026, and announced the action the next day.[2][1]
The regulator alleges that between November 1, 2023 and August 18, 2025, Amazon AU's Prime contracts contained five terms, across two categories governing variation of the services and variation of the agreement, that permitted it to unilaterally make materially adverse changes without any contractual entitlement for subscribers to receive refunds or other meaningful redress, and that Amazon AU relied on one or more of those terms when it introduced the Prime Video ads.[2] The ACCC further alleges that Amazon US was knowingly concerned in the conduct: involved in drafting the Australian contracts that contained the terms, responsible for the decision to introduce advertising to Prime Video globally, and involved in helping implement that decision in Australia.[2][1]
ACCC Chair Gina Cass-Gottlieb described the allegation in the regulator's media release:
We allege that Amazon AU included multiple unfair terms in its contracts with Australian annual Prime subscribers, and it then relied on some of these terms to bring ads onto Amazon Prime Video.
She added that "consumers who wanted to avoid ads were left with no choice but to pay more to maintain the service they'd initially signed up for."[1]
In its concise statement, the ACCC pleads that the terms were unfair within the meaning of section 24 of the Australian Consumer Law and void under section 23(1), that Amazon AU contravened section 23(2A) by proposing each term and section 23(2C) by relying on them, and that Amazon US is liable under section 224(1)(e) as a party knowingly concerned in the contraventions.[2] The regulator identifies the clauses as the kind described in section 25(d) and (g) of the Australian Consumer Law, which lists terms permitting one party to unilaterally vary a contract or the characteristics of the services supplied.[2][1] Unfair contract term protections have been part of the Australian Consumer Law since it first took effect in 2010, but since November 2023 penalties have applied to proposing or relying on such terms in contracts made or renewed from that date.[1] The ACCC describes the case as one of the first contested matters it has taken under that new penalty regime, which applies to contracts made or renewed from November 9, 2023.[1]
The regulator is seeking declarations, penalties, consumer redress, costs, and other orders against both Amazon AU and Amazon US.[1][3] Paterson wrote in The Conversation that the maximum penalty is the greatest of A$50 million, three times the value of the benefit obtained from the conduct, or 30% of adjusted turnover during the breach period.[3] Cass-Gottlieb used the case to warn other subscription businesses:
Contraventions of unfair contract term protections are subject to significant penalties. We strongly encourage all businesses, particularly those offering subscriptions, to review their contracts to ensure they comply with the Australian Consumer Law.
An Amazon Australia spokesperson said in a statement that the company was reviewing the case:
We have cooperated with the ACCC throughout its investigation and remain focused on providing the best experience for our Australian customers.
Change-in-benefits defense and US precedent
editThe United States had already seen a comparable class action over the 2024 Prime Video ads. Wilbert Napoleon sued Amazon.com, Inc. on February 9, 2024 in the U.S. District Court for the Western District of Washington (Napoleon v. Amazon.com, Inc., Case 2:24-cv-00186), pleading seven counts, including breach of contract and state consumer-protection claims, over the ads and the US$2.99 charge to remove them.[5]
In July 2025, U.S. District Judge Barbara J. Rothstein dismissed the suit, rejecting the argument that adding ads amounted to a price increase.[4] Rothstein wrote that the addition of ads "constituted a change in subscription benefits as opposed to a price increase," and that all subscribers agree to a contract when they join Prime, giving Amazon the ability to alter the nature of the services provided.[4] She acknowledged that for members who paid to keep their streaming ad-free, the change had an effect on their wallets she called "tantamount" to a price increase, then explained why she still treated it as a benefit change:
The Court, however, is compelled to maintain the distinction between a benefit removal and a price increase for several reasons. First, this distinction is repeatedly reinforced in the contracts themselves. Benefit modifications and removals are expressly authorized throughout both contracts; price increases are circumscribed and allowed only according to certain conditions.
Rothstein noted that the subscription fee did not change for members who took no action, and that "the only subscribers who experienced any increase in price were those who voluntarily chose to incur one by affirmatively opting in to the $2.99-a-month charge to avoid ads."[4]
Paterson wrote that the Australian case may be legally difficult for a different reason. She noted that the ACCC's own published guidance suggests a fair contract should let consumers terminate without a penalty after a unilateral change from the supplier, but does not explicitly require pro rata refunds, which she said could form part of Amazon's defence.[3] By the time the case was filed, Amazon had amended its Prime and Prime Video terms to add a pro rata refund for annual subscribers who cancel after a materially adverse change, a change the ACCC records in its concise statement and Paterson confirmed was in effect on her own account.[2][3] She has argued for years that unilateral variation clauses are inherently unfair:
The whole purpose of entering into a contract is to lock in a promise to supply goods or services on agreed terms. If the supplier ... can change the terms at any time, in any way it likes, it undermines the whole point of making a contract.
Paterson added that with Amazon US also named, the case would be watched in other jurisdictions with similar unfair-contract-term laws, such as the United Kingdom and the European Union.[3]
German court ruling
editA court in another jurisdiction reached the opposite result on the same practice. In December 2025, the Regional Court of Munich I (Landgericht München I) granted a claim brought against Amazon Digital Germany GmbH by the Federation of German Consumer Organisations (vzbv), Case 33 O 3266/24.[6][7]
The consumer association had challenged Amazon's move to add advertising to Prime Video, announced in a January 3, 2024 email telling customers that from February 5, 2024 titles could carry limited advertising, as an impermissible unilateral change to the contract, and had argued the email was misleading under Section 5 of Germany's Unfair Competition Act because it suggested customers would from then on receive only an ad-supported service.[6] The judgment is not yet final.[7]
Prime Video Ultra
edit
In the United States, Amazon later restructured its ad-free option. In March 2026, Amazon announced Prime Video Ultra, a US$4.99-per-month tier that replaced the Prime Video Ad Free subscription, reserving 4K/UHD streaming and Dolby Atmos for that tier while keeping HD and Dolby Vision in the base Prime Video benefit.[8] Amazon said Prime membership itself was unchanged at US$14.99 per month or US$139 per year, and that the Ultra tier also raised concurrent streams to five and offline downloads to 100.[8]
See also
editReferences
edit- ↑ 1.00 1.01 1.02 1.03 1.04 1.05 1.06 1.07 1.08 1.09 1.10 1.11 1.12 1.13 1.14 1.15 1.16 1.17 1.18 "Amazon in court for introducing ads to Prime Video using allegedly unfair contract terms". Australian Competition and Consumer Commission. 2026-06-30. Retrieved 2026-07-05.
- ↑ 2.00 2.01 2.02 2.03 2.04 2.05 2.06 2.07 2.08 2.09 2.10 Australian Competition and Consumer Commission (2026-06-29). "Concise Statement: Australian Competition and Consumer Commission v Amazon Commercial Services Pty Ltd" (PDF). Federal Court of Australia. Archived (PDF) from the original on 2026-07-02. Retrieved 2026-07-05.
- ↑ 3.0 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 Paterson, Jeannie Marie (2026-06-30). "Amazon is being taken to court for introducing ads to Prime Video. The world will be watching". The Conversation. Archived from the original on 2026-07-01. Retrieved 2026-07-05.
- ↑ 4.0 4.1 4.2 4.3 4.4 4.5 Dade Hayes (2025-07-17). "Class-Action Suit Against Amazon For Putting Ads On Prime Video Dismissed By Federal Judge". Deadline. Archived from the original on 2025-07-26. Retrieved 2026-07-05.
- ↑ 5.0 5.1 "Napoleon v. Amazon.com, Inc., class action complaint (Case 2:24-cv-00186)" (PDF). U.S. District Court for the Western District of Washington. 2024-02-09. Retrieved 2026-07-05.
- ↑ 6.0 6.1 6.2 "Einseitige Abschaffung der Werbefreiheit durch Streaming-Anbieter" [Unilateral removal of ad-free service by a streaming provider] (in Deutsch). Landgericht München I. 2025-12-17. Retrieved 2026-07-05.
- ↑ 7.0 7.1 "Urteil gegen Amazon: Einführung von Werbung bei Prime Video war unzulässig" [Judgment against Amazon: introducing ads on Prime Video was impermissible] (in Deutsch). Verbraucherzentrale Bundesverband. 2025-12-16. Retrieved 2026-07-05.
- ↑ 8.0 8.1 8.2 Amazon Staff (2026-03-13). "Prime Video's Ad Free subscription is now Prime Video Ultra for $4.99 a month". Amazon. Archived from the original on 2026-05-05. Retrieved 2026-07-05.