FTC and 20-Plus States File Lawsuit Accusing Amazon of Secretly Inflating Ad Prices

The Federal Trade Commission, joined by more than 20 state attorneys general, filed a lawsuit against Amazon alleging the company deceived advertisers by covertly raising the minimum prices businesses had to pay to have their products featured in sponsored listings on its retail platform. The suit claims Amazon reaped billions of dollars through this manipulation of its advertising auction system without properly disclosing the changes to advertisers.

Amazon's advertising business generated $68.6 billion in revenue last year, making it one of the company's most profitable segments and a growing contributor to its overall earnings. The FTC action targets how Amazon ran those ad auctions and what it disclosed to the businesses that rely on the platform to reach consumers.

Amazon shares fell more than 3% on the news, erasing roughly $86 billion in market value before the lawsuit was formally filed. The case is among the most significant regulatory challenges Amazon has faced in its advertising operations and could expose the company to billions of dollars in civil penalties.