The U.S. Federal Trade Commission (FTC) is preparing to file a lawsuit against Amazon, accusing the company of systematically inflating advertising rates for sellers. According to my data, the regulator claims that Amazon secretly manipulated minimum prices at auctions, which over seven years brought the e-commerce giant tens of billions of dollars.
More than 20 state attorneys general will join the lawsuit, underscoring the scale of the claims. Investors have already reacted: in the afternoon on Monday, AMZN shares fell more than 3%, and market capitalization shrank by approximately $86 billion. This is not just a legal formality—it is a signal of deep systemic problems in Amazon's business model.
The mechanics of alleged manipulations: how the price-inflation scheme worked
The essence of the accusations boils down to this: previously, Amazon conducted auctions so that the winner did not overpay—bids remained at a minimum level. However, in 2018, the company introduced its own bid, which was slightly higher than the second-largest one. This forced the winner to pay more. Inside the corporation, this practice was called a "soft reserve."
Amazon saw all competitors' bids but did not inform sellers about the innovation. Management carefully tracked the additional profit and kept the details secret. The method was first used during peak sales days, when sellers attributed price increases to high competition. Currently, Amazon raises the minimum bid in 70–80% of auctions, and during holiday periods, according to the FTC's estimate, the cost per click increased by 50%. The seller guidelines updated in April already mention a reserve price.
"Some reserves help allocate ad placements by setting a bid threshold," Amazon's advertising instructions state.
Market reaction and long-term risks
In the first half of Monday, Amazon shares traded at $257.87, down from the $266.43 mark in the previous session. In August, the stock remained near its all-time high. Monday's decline has already exceeded past fines by several times. In September last year, Amazon paid a $1 billion civil penalty for the Prime subscription enrollment process. This time, the market lost in one day an amount exceeding the fine by almost 86 times.
The fine is not the main risk for the company. Advertising brought Amazon $69.6 billion in 2025—roughly a tenth of total revenue of $716.9 billion. This segment is particularly profitable and helps cover large AI expenses. If the judge changes the rules for conducting auctions, the main source of profit will be under threat. It is more important to watch what decision is made regarding the mechanics of advertising operations, rather than the size of the fine.
The Google example shows that such cases last for years. In 2025, a judge ruled the company's advertising business illegal, but the details of the penalty have not yet been resolved. This creates uncertainty that could weigh on Amazon's stock quotes for a long time.
My analysis: For crypto investors and traders, this is an important signal about regulatory risks in the technology sector. If the FTC succeeds in changing the auction model, Amazon's margin in the advertising business could significantly shrink, which would affect the company's financial performance. I recommend closely monitoring the development of the case—it could set a precedent for the entire online advertising industry.