Amazon Stock Falls as FTC Sues Over Alleged Price Manipulation

Amazon's stock took a hit on Tuesday as investors weighed in on a new antitrust lawsuit from US regulators, while broader market weakness added to the selling pressure. The Federal Trade Commission and 22 US states sued Amazon over allegations that it manipulated the prices advertisers paid to promote products on its marketplace.

The FTC alleges Amazon illegally raised prices for advertisers by secretly increasing the minimum amount required to place advertisements promoting products on its marketplace. According to the agency, Amazon systematically inflated advertising auction prices without advertisers' knowledge, potentially costing them $20 billion or more.

Amazon has pushed back strongly against the accusations, arguing that its advertising system is designed to improve the relevance of advertisements shown to shoppers. The company said in a blog post that the average cost per click for advertisers remained flat between 2019 and 2024, while sales generated from those clicks increased.

Despite the lawsuit, analysts have largely maintained a constructive view of Amazon's underlying business. Citi said the FTC action could create near-term pressure on Amazon shares, but argued that the company's advertising business remains strong.