Amazon Hit with $20B Ad Scam Lawsuit

Amazon's stock price took a hit after the US Federal Trade Commission (FTC) along with 22 states sued the e-commerce giant for allegedly manipulating advertising auctions and inflating prices businesses paid to promote products on its platform.

The FTC alleges that Amazon secretly altered its ad auction system to increase prices paid by advertisers, potentially generating tens of billions of dollars in additional revenue over several years. The company allegedly introduced a 'soft reserve' into its auctions, inserting its own higher price instead of the next-highest bid.

The lawsuit focuses on Amazon's digital advertising business, which generated about $68.6 billion in sales last year, making it the world's third-largest digital advertising platform behind Google and Meta.

Amazon has rejected the allegations, calling them 'misguided and flawed', and disputed the regulator's interpretation of its auction practices and internal documents.