Amazon Australia is currently embroiled in a legal battle with the Australian Competition and Consumer Commission (ACCC) over its decision to introduce advertisements on Prime Video and subsequently charge existing subscribers an additional fee for an ad-free viewing experience. The ACCC has initiated legal proceedings in the Federal Court, alleging that Amazon’s Prime subscription contracts contained unfair terms that allowed the company to make significant changes to its streaming service without adequately compensating customers.

The core of the ACCC’s complaint revolves around Amazon’s move in 2024 to integrate advertisements into Prime Video. This change directly impacted customers who had already paid upfront for an annual Prime membership, effectively downgrading their service to an ad-supported version. Those subscribers wishing to maintain an ad-free experience were then required to pay an extra A$2.99 per month, despite having already committed A$79 for their yearly subscription.

ACCC Chair Gina Cass-Gottlieb stated, "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." This highlights the regulator’s focus not just on the ads themselves, but on the underlying contractual framework that permitted such alterations.

More than 850,000 Australian subscribers had prepaid for a year’s subscription when the advertisements were introduced. These customers, according to the ACCC, found themselves receiving a diminished service for the remainder of their prepaid membership unless they opted to pay the additional monthly charge. Amazon had informed customers that this extra payment would ensure Prime Video remained free of advertisements.

The lawsuit extends beyond just the introduction of ads. The ACCC contends that Amazon relied on five specific unfair contract terms, which granted it the power to implement major changes to various Prime services, including Prime Video, without offering subscribers refunds or meaningful compensation. These terms were reportedly part of contracts signed by over one million customers between November 1, 2023, and August 18, 2025.

The Australian watchdog also alleges that Amazon.com Services LLC, the parent entity, was involved in drafting these Australian subscription contracts and knowingly participated in the conduct. The ACCC’s investigation began after it received numerous consumer complaints regarding the sudden appearance of advertisements on Prime Video in 2024.

For over a decade, Prime Video had been offered as an ad-free component of Amazon’s broader Prime membership, which bundles various benefits like faster deliveries and shopping perks. Amazon launched its Prime service in Australia in 2018, and the global rollout of advertisements on Prime Video commenced in early 2024 across several markets.

In response to the legal action, an Amazon Australia spokesperson informed Reuters that the company is "reviewing the case filed by the ACCC in detail" and has cooperated with the regulator throughout its investigation. The ACCC is seeking various remedies from the Federal Court, including declarations, financial penalties, consumer redress for affected subscribers, and legal costs.

This legal challenge underscores a growing tension in the streaming industry as platforms seek new revenue streams, often by introducing ads or tiered pricing models. The outcome of this case could set a significant precedent for consumer rights and contract law in the digital subscription economy, particularly regarding how service providers can alter terms for existing, prepaid customers. It will be closely watched by both consumers and other streaming services globally.