FTC reportedly suing Amazon over ad practices, shares fall

Amazon.com Inc. stocks dipped 2.8% on Monday after a Wall Street Journal report revealed the Federal Trade Commission intends to sue the company over alleged ad pricing practices. The FTC aims to file the lawsuit in a Seattle federal court, claiming Amazon manipulated advertising costs over a seven-year period. Over 20 state attorneys general from various jurisdictions will join the suit.

The FTC alleges Amazon deceived advertisers by covertly increasing the minimum bid they had to pay for product promotions. Notable states expected to join the case include New York, California, and Florida.

Amazon, the world's third-largest digital advertising platform, generated $68 billion in ad revenue in 2025, according to SEC filings. The FTC will argue that Amazon began modifying its bidding strategy in 2018 by placing a "soft reserve" bid, which was higher than the runner-up competitor's bid. This tactic inflated the cost of ads for advertisers. The tech giant was allegedly aware of its competitors' bids but kept the practice under wraps.

Amazon's ad executives monitored the additional surcharge earned from this strategy and made efforts to conceal it from the public. Initially, the firm employed the tactic primarily during major shopping days, when companies perceived higher ad rates as a result of intense competition for customers' attention. In recent years, Amazon has been intervening in auctions to raise the minimum price 70-80% of the time, raising the pay-per-click ad cost by 50% during major shopping days.

The FTC's allegations also suggest that Amazon's strategy increased the minimum price by 70-80% of the time over the past few years. Amazon publicly disclosed the use of "reserve pricing" that could impact the cost of ads in April, but the practice has been in place since 2018.

This marks the FTC's third major case against Amazon. Last year, the company agreed to pay $2.5 billion to settle a lawsuit alleging it tricked consumers into signing up for its Prime service and made it difficult to cancel. Another lawsuit claiming illegal monopolization is set for trial next year.