Amazon Stock Falls After FTC, 22 States Sue Over Ads

Amazon stock fell about 3% in afternoon trading Monday following news that the U.S. Federal Trade Commission, joined by a bipartisan group of 22 states, filed a lawsuit alleging Amazon illegally raised prices for advertisers, according to NBC News. The FTC lawsuit against Amazon was filed in federal court in the Western District of Washington.

The FTC alleged that Amazon systematically inflated auction prices for advertisers without their knowledge by surreptitiously raising the minimum price required to place ads. The Amazon FTC lawsuit claims the practice cost advertisers $20 billion or more. "Amazon has been able to generate billions of dollars in profits , at the expense of its auction advertising customers," the FTC said in its filing.

The lawsuit centers on Amazon's advertising auction system, which is used to determine ad placement and pricing. The FTC alleged advertisers suffered billions of dollars in harm from higher Amazon advertising costs, while the states involved could seek civil penalties and attempt to recover some of that money.

Amazon denied the allegations in a blog post Monday, saying its Amazon advertising practices are designed to show shoppers the most relevant ads. The company said average cost per click remained flat from 2019 to 2024, while sales generated from those clicks increased. "Amazon's approach to pricing contradicts any suggestion of consumer harm," the company said, adding it works to ensure its prices "meet or beat those offered by other retailers." Amazon's full response is available via the company's official statement.

The Amazon advertising lawsuit follows a separate case in which Amazon agreed last September to pay $2.5 billion in fines and reimbursements to Prime subscribers, settling FTC allegations it deceived customers into signing up for subscriptions.

Further details on the FTC's case are available via the FTC's official press release.

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