FTC reportedly suing Amazon over ad practices, shares fall

Investing.com -- Amazon.com Inc shares fell 2.8% on Monday following a report by the Wall Street Journal that the Federal Trade Commission will file a lawsuit against the company over allegations related to its advertising pricing practices.

The FTC plans to file the lawsuit in a Seattle federal court, alleging that Amazon manipulated prices businesses paid to advertise on its retail platform over a seven-year period, the report said. More than 20 state attorneys general from both parties will join the case.

The lawsuit will allege that Amazon deceived advertisers by secretly raising the minimum price they had to pay to place ads promoting their products, FTC officials said. States expected to join include New York, California and Florida.

Amazon operates the third-largest digital advertising platform globally behind Alphabet Inc's Google and Meta Platforms Inc. The company earned $68 billion from advertising in 2025, according to securities filings.

The FTC will allege that Amazon began changing its auction strategy in 2018 by entering its own bid, known as a "soft reserve," which was higher than the price of the runner-up bidder. This practice raised the price paid for an ad. Amazon reportedly knew the merchants' competing bids and did not disclose its new practice.

Amazon's ad executives tracked the "surcharge" they earned from the strategy and sought to limit how much others knew about it, the report said. The executives initially deployed the strategy only on popular shopping days when companies would think higher ad rates resulted from intense competition for shoppers' attention.

In recent years, Amazon has intervened in auctions to raise the minimum price 70% to 80% of the time. The FTC's claims include that Amazon's strategy raised the pay-per-click ad cost by 50% on major shopping days.

Amazon has told advertisers on a public webpage, last updated in April, that it uses "reserve pricing" that "may affect the cost of your ad."

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

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