FTC Sues Amazon Over Alleged Advertising Price Fixing

Amazon's shares 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 that businesses paid to promote products on its platform.

The lawsuit targets Amazon's digital advertising business, one of the company's major growth engines. The FTC alleges that Amazon secretly altered its ad auction system to increase the prices paid by advertisers, potentially generating tens of billions of dollars in additional revenue over several years.

According to the allegations, Amazon introduced a 'soft reserve' into its ad auctions, which instead of simply charging the winning advertiser based on the next-highest bid, inserted Amazon's own higher price into the auction, pushing up the final cost for advertisers.