FTC Slams Amazon with Antitrust Lawsuit Over Secret Advertising Price Hikes

The Federal Trade Commission (FTC) is planning to sue Amazon (AMZN), alleging that the e-commerce giant quietly raised prices for businesses advertising on its platform. The regulators claim this move earned Amazon billions of dollars over seven years and harmed advertisers.

According to FTC officials, Amazon misled advertisers by changing its ad-auction system in 2018 to raise costs without their knowledge. The company allegedly added a 'soft reserve' bid, which was higher than the second-place bid, and used this tactic most on major shopping days.

The lawsuit, backed by over 20 state attorneys general, may seek civil penalties and attempt to recover some of those losses. This is not Amazon's first run-in with regulators; it paid $2.5 billion last year to settle claims that it tricked users into signing up for Prime and made cancellation difficult.

Amazon's legal and regulatory risk accounts for 25% of its total risk profile, which is higher than the sector average of 15.5%. Despite this, Wall Street has a Strong Buy consensus rating on Amazon stock, with an average price target of $334.05 indicating 25.38% upside potential.