S. Federal Trade Commission (FTC), along with 22 states, sued the e-commerce giant over allegations that it manipulated advertising auctions and inflated the prices businesses paid to promote products on its platform.

com2/10FTC Targets Amazon’s Ad BusinessThe lawsuit focuses on Amazon’s digital advertising business, one of the company’s major high-margin growth engines. The FTC alleges Amazon secretly altered its advertising auction system to increase the prices paid by advertisers, potentially generating tens of billions of dollars in additional revenue over several years.

com3/10How the Alleged Pricing System WorkedAccording to the allegations, Amazon introduced a so-called “soft reserve” into its ad auctions. Instead of simply charging the winning advertiser based on the next-highest bid, the company allegedly inserted its own higher price into the auction, pushing up the final cost for advertisers.

2 million advertising customers. Regulators also argue that higher advertising costs could ultimately be passed on to consumers through higher product prices.

com5/10Amazon Rejects the AllegationsAmazon has pushed back strongly against the FTC's claims, calling the case misguided and flawed. The company has argued that its advertising system has delivered value to sellers and disputed the regulator's interpretation of its auction practices and internal documents.

com6/10A Major Business Is in FocusThe case puts Amazon's rapidly expanding advertising operation under the spotlight. 6 billion in advertising sales in 2025, making it the world's third-largest digital advertising platform behind Google and Meta.

5% on Monday, with the stock initially dropping more than 3% as reports of the impending lawsuit emerged. The decline reflected investor concerns over potential financial penalties, regulatory restrictions and increased scrutiny of Amazon's advertising practices.

S. The company is already facing a separate FTC-backed antitrust case concerning its online retail marketplace, highlighting the broader scrutiny of its market power and business practices.

AP9/10What Investors Will WatchInvestors will now focus on the potential financial and operational consequences of the advertising case. 10/10The Bottom LineThe FTC lawsuit creates a fresh overhang for Amazon at a time when investors are closely watching the company's ability to sustain growth across e-commerce, cloud computing and advertising.