Amazon Faces FTC Lawsuit Over Alleged Advertising Price Manipulation
Amazon's stock price plummeted by 2.5% after the US Federal Trade Commission (FTC) filed a lawsuit against the e-commerce giant, alleging that it manipulated advertising prices on its platform and extracted tens of billions of dollars from businesses over seven years.
The complaint, joined by more than 20 state attorneys general, claims that Amazon secretly increased the minimum price advertisers were required to pay to promote products on its marketplace. As a result, advertisers suffered more than $20 billion in harm.
The FTC alleges that Amazon began changing its advertising auction strategy in 2018, inserting its own bid into some auctions through a mechanism called a 'soft reserve'. This practice, which the company did not disclose to advertisers, allegedly increased the amount paid by merchants.
Amazon rejected the allegations, stating that it accurately explained how its auctions operated and that improvements to its advertising technology had increased the relevance and value of ads for businesses. The company's system establishes a 'real-time minimum value' based on what an advertisement is worth, but advertisers never pay more than their submitted bids.
The FTC's latest action adds to the growing regulatory pressure facing Amazon, which operates the world's third-largest digital advertising platform behind Google and Meta Platforms. In 2025, Amazon generated $68 billion in advertising revenue, making it a significant player in the industry.