FTC drafts complaint alleging Amazon misled advertisers

Federal regulators have prepared a formal complaint against Amazon over allegations the company misled advertisers on its platform, potentially setting the stage for a lawsuit with penalties reaching billions of dollars. The Federal Trade Commission's consumer protection unit has drafted the complaint as part of an investigation examining whether Amazon properly disclosed key terms, fees, and pricing structures related to its advertising auctions.

The inquiry focuses specifically on the transparency of Amazon's advertising auctions and whether the company adequately disclosed the use of reserve pricing, which sets a minimum price advertisers must meet to purchase ad slots. Several state attorneys general are collaborating with the FTC on the investigation, a coordination that analysts say could complicate any potential settlement negotiations, as a federal resolution might not address state-level legal exposure.

Amazon's stock showed little movement in after-hours trading following the initial report, with shares hovering around $246.45. While sources characterize potential fines as reaching into the billions, no specific penalty amount has been disclosed. Given Amazon's market...