The US Federal Trade Commission (FTC) is reportedly preparing a potential lawsuit against Amazon, alleging that the e-commerce giant misled advertisers about key aspects of its advertising business. According to a Bloomberg report, the FTC's consumer protection unit has drafted a complaint, which could lead to significant financial penalties or a settlement as early as this summer.
Investigation Details
The probe focuses on Amazon's sponsored listings and ads that appear prominently in search results. Regulators are examining whether Amazon adequately disclosed pricing terms, conditions, and reserve pricing requirements—minimum price thresholds for ad placements. The FTC has also requested additional information on how the advertising auction system operates and how pricing is communicated to advertisers.
Several state attorneys general are involved, which could amplify Amazon's financial risks. Under state consumer protection and unfair competition laws, penalties can accumulate daily, potentially reaching billions of dollars given the scale of Amazon's ad business, which generated $68.6 billion in revenue last year.
Regulatory Challenges
This advertising investigation is one of several regulatory hurdles Amazon faces. The FTC has been probing various practices since 2019, and Amazon recently paid $2.5 billion to settle a separate probe over its Prime subscription program. Additionally, Amazon is preparing for a trial next year over antitrust allegations related to its market position influencing brand pricing on competing platforms.
Any formal FTC action requires approval from Chairman Andrew Ferguson and Commissioner Mark Meador before becoming final.
