The FTC's investigation into Amazon's advertising practices may result in billions of dollars in penalties.
Amazon's advertising division has quietly turned into a significant source of revenue for the company, but it might also become a major regulatory challenge. According to a report from Bloomberg on June 16, the U.S. Federal Trade Commission (FTC) has prepared a potential complaint alleging that Amazon has misled advertisers, a situation that could result in civil penalties amounting to billions of dollars, as stated by sources familiar with the issue.
No formal complaint has been lodged yet. Both the FTC and Amazon declined to provide comments, and the information is based on unnamed sources, which suggests it might be more indicative of the regulator's direction rather than an established outcome.
What the FTC is investigating focuses on whether Amazon has correctly disclosed the terms and pricing of its advertisements, specifically the “sponsored listings” that appear at the top of search results when consumers seek particular products. The primary issue relates to “reserve pricing,” which establishes the minimum price advertisers must meet to secure an ad placement. If these price floors are not transparent, an advertiser who overlooks one may just raise their bid, effectively competing against an unseen figure that only Amazon can access.
This technical aspect can lead to increased advertisement expenditure directed towards Amazon. The regulator is also scrutinizing Google regarding similar auction-related issues.
The more significant threat comes from the states. The potential conversion of this investigation into a billion-dollar liability arises from the FTC’s limited capacity to impose financial penalties, but Bloomberg indicates that several state attorneys general are engaged in the matter. State consumer-protection laws permit fines that can reach tens of thousands of dollars for each violation, each day. Given the vast number of ads Amazon provides, these amounts can accumulate rapidly, which accounts for the estimation of “billions.”
The agency might conclude the investigation as early as this summer, whether through legal action or a settlement; however, it will require a vote from its two Republican commissioners, Andrew Ferguson and Mark Meador, first.
The focus on Amazon is intentional. According to a company filing, advertising generated $68.6 billion for Amazon in 2025, making it the third-largest online ad seller after Google and one of its fastest-growing revenue streams. Additionally, the FTC has been investigating the company since at least 2019. Last fall, Amazon consented to pay $2.5 billion to resolve allegations that it misled consumers into subscribing to Prime. A separate antitrust trial concerning claims that it compelled brands to increase prices at competing retailers is scheduled for early 2027.
An advertising case would represent a third legal front for Amazon. Currently, it stands as a drafted complaint and a report from unnamed sources but directly targets a segment of the business that Amazon can least afford to see disrupted.
Other articles
Interpol has noted a significant increase in cybercrime and scams throughout Asia.
A recent assessment by Interpol indicates that cybercrime constitutes approximately 30% of reported crime in many parts of Asia, with scam operations generating nearly $40 billion annually.
G7 leaders consider a pathway for 'trusted partners' to access America's leading AI models.
A few days after the US restricted foreign access to Anthropic’s leading models, G7 officials discussed a 'trusted partners' initiative with Washington in Evian.
The US has decided to postpone adding DeepSeek and over 100 Chinese companies to its blacklist.
An interagency panel has given the green light to include DeepSeek, CXMT, and over 100 Chinese companies on the US Entity List. The Trump administration has refrained from taking action to minimize tension with Beijing.
Uber's robotaxi service is set to debut in Houston in 2027.
Uber is set to introduce its Lucid-Nuro robotaxi service in Houston by mid-2027, marking its second market in the United States and presenting a new challenge to Waymo in the latter's home territory.
Interpol has indicated a significant increase in cybercrime and scams throughout Asia.
A recent assessment by Interpol reveals that cybercrime accounts for approximately 30% of reported crime across much of Asia, with scam centers raking in nearly $40 billion annually.
Reports indicate that negotiations between Microsoft and Oracle for leasing cloud capacity have fallen through.
According to Business Insider, a $3 billion agreement for Microsoft to lease Oracle's cloud capacity collapsed due to issues with the FedRAMP security framework. Oracle contests this narrative.
The FTC's investigation into Amazon's advertising practices may result in billions of dollars in penalties.
According to Bloomberg, the FTC has prepared a possible lawsuit alleging that Amazon has misled advertisers regarding concealed advertising costs, a litigation that could result in billion-dollar expenses.