Amazon Hit with FTC Lawsuit Over Alleged Ad Price Manipulation

Amazon shares are experiencing downward pressure due to a report that the Federal Trade Commission plans to sue the company over allegations it secretly manipulated ad prices paid by merchants on its platform.

The FTC intends to file a lawsuit against Amazon in federal court in Seattle, alleging the company quietly pushed up the minimum price merchants had to pay to advertise on its platform, generating tens of billions of dollars for Amazon over roughly seven years.

According to the report, Amazon began adjusting its ad auction system in 2018, inserting its own bid, an internal tool called a 'soft reserve,' to push prices above what the next-highest bidder had offered, without disclosing the practice to merchants.

The lawsuit would mark the FTC's third major legal action against Amazon, following a $2.5 billion settlement last year over Prime cancellation practices and a separate monopoly case set to go before a jury next year.