FTC To Sue Amazon for Deceptive Advertising, How Will Stock React?

The Federal Trade Commission (FTC) plans to sue Amazon on Monday, according to a report on the Wall Street Journal. Officials say the company quietly raised the minimum price sellers paid for ads on its store. The practice earned Amazon tens of billions of dollars over seven years.

More than 20 state attorneys general are joining. Investors did not wait for the complaint. Amazon shares fell over 3% on Monday afternoon, erasing roughly $86 billion in market value.

How the Alleged Ad Price Manipulation Worked

Sellers bid against each other every time a shopper searches. Amazon once ran an auction built to stop winners from overpaying. That design kept bids low.

In 2018, officials say, Amazon began placing a bid of its own. It sat just above the runner-up, so the winner paid more. Insiders called it a soft reserve.

Amazon could see every rival bid. It never told sellers about the change. Executives tracked the extra revenue and kept the details tightly held.

The tactic first appeared on busy shopping days, when sellers would blame heavy competition. Amazon now lifts the minimum in 70% to 80% of auctions. On peak days, the FTC says click prices climbed 50%.

Amazon’s seller guidance, updated in April, does mention reserve pricing.

“Some reserves help allocate ad space by setting a bid threshold,” Amazon advertising guidance, via WSJ.

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How Amazon Stock Could React Once the Case Is Filed

Amazon (AMZN) traded at $257.87 early Monday afternoon, down from a $266.43 close. The stock had held near record highs through August.

Monday’s selloff already dwarfs past fines. Amazon paid a $1 billion civil penalty last September over Prime sign-ups. The market erased about 86 times that figure in a single afternoon.

So the fine is not the real risk. Ads brought in $69.6 billion in 2025, close to a tenth of Amazon’s $716.9 billion in sales. Those dollars carry high margins that help fund heavy AI capital spending.

A judge who rewrites the auction rules would hit that engine directly. Watch the remedy section of the complaint, not the dollar figure.

Google shows how slowly this plays out. A judge ruled against its ad business in 2025. The remedy is still unsettled.