FTC Sues Amazon Over Alleged Advertising Auction Manipulation

Amazon's stock took another hit on September 1 after the Federal Trade Commission (FTC) filed a lawsuit against the e-commerce giant for allegedly manipulating its advertising auction practices to inflate prices paid by sellers and brands.

The FTC, joined by a coalition of states, claims that Amazon designed its ad systems to overcharge advertisers competing for placement on its retail platform. The regulator alleges that the outcomes of these auctions were skewed against the businesses paying for visibility.

This latest lawsuit adds to the growing list of legal challenges facing Amazon. Regulators have previously targeted the company's treatment of third-party sellers and its logistics arrangements, and now the advertising unit - one of Amazon's fastest-growing revenue streams - is under scrutiny.

Investors reacted to the news by pushing Amazon's stock lower during trading hours, but not everyone agrees that this reaction is justified. Jim Cramer, host of CNBC's Mad Money and head of the network's Investing Club, warned against overreacting to the lawsuit, saying 'Selling Amazon shares over the new FTC lawsuit would be hysterical.'

The case now moves into pretrial proceedings, which could stretch across several years before any ruling.