FTC Targets Amazon Over Alleged Ad Bid Manipulation

Amazon's stock plummeted by over 3% on August 31st, dropping below $260, after the Federal Trade Commission (FTC) announced plans to sue the company for allegedly manipulating ad bids and inflating advertising costs.

The FTC alleges that Amazon altered its ad auction strategy in 2018 by introducing 'soft reserve' bids, which were higher than the second-highest bidder, driving up final ad prices. This practice was allegedly concealed from merchants, who mistakenly believed the higher prices stemmed from intense traffic competition during peak shopping days.

The FTC claims that Amazon intervened to raise minimum bids in 70% to 80% of ad auctions, resulting in a 50% increase in pay-per-click (PPC) advertising costs during major promotions. Amazon's advertising revenue reached $68 billion in 2025, making it one of the company's fastest-growing and highest-margin businesses.

This is the third major case brought by the FTC against Amazon, following a $2.5 billion settlement last year for allegedly duping users into subscribing to Prime and making cancellation difficult.