Amazon Faces Possible FTC Lawsuit Over Ad Practices, Billions in Penalties at Stake

Amazon is facing a potential lawsuit from the Federal Trade Commission (FTC) that could result in billions of dollars in civil penalties. The FTC is investigating Amazon’s advertising business, which generated $68.6 billion in revenue last year, over claims that the company misled advertisers about sponsored ads and related pricing. The probe, which is being run by the agency’s consumer protection unit, focuses on whether Amazon properly disclosed the terms and pricing related to its ads, including ‘sponsored listings’ or ‘sponsored ads’ that appear at the top of search results on Amazon’s marketplace. The investigation is also looking into Amazon’s auctions and whether it disclosed ‘reserve pricing’ for some search ads. The FTC may resolve the investigation as soon as this summer, pending votes from Chairman Andrew Ferguson and Commissioner Mark Meador. Multiple state attorneys general are also involved in the case, which could allow for tens of thousands of dollars in daily fines. Amazon’s advertising business has become a lucrative and fast-growing line of business, with the company bringing in $68.6 billion in revenue last year. The company has faced several investigations from the FTC in the past, including a probe over its Prime subscription practices that resulted in a $2.5 billion settlement last fall. A trial is also slated for early next year over FTC antitrust claims that Amazon has forced brands to raise prices at competing retailers or suffer limited or no visibility on its marketplace.