FTC sues Amazon for deceptive advertising: $68 billion at stake

What happened?

According to Gizmodo, the U.S. Federal Trade Commission (FTC) is preparing a lawsuit against Amazon for deceptive practices in its advertising business. The action focuses on how Amazon sells and reports ads, accusing the company of failing to adequately disclose actual costs and manipulating performance metrics to inflate the value of its services. Amazon generated $68 billion in advertising revenue in 2025, making it the third-largest player in the digital market, behind Google and Meta. The FTC investigation has been ongoing for more than two years, according to sources close to the case, and the lawsuit could be filed in the coming weeks. This move adds to a series of regulatory actions against Amazon, including the 2023 lawsuit over deceptive Prime subscriptions and ongoing European Union investigations into antitrust practices.

Why is this important?

This lawsuit is significant for several reasons. First, digital advertising is the economic engine of the internet, and Amazon has grown rapidly in this sector, attracting millions of small and medium-sized advertisers. If the allegations are true, it would mean Amazon has been systematically deceiving its customers, which could erode trust in the entire advertising ecosystem. Additionally, the FTC has intensified its antitrust scrutiny under the current administration, and this case could set precedents for how dominant platforms are regulated. Unlike Google and Facebook, which were fined by the FTC in 2011 and 2019 respectively for privacy violations and deceptive advertising, Amazon faces broader scrutiny due to its dual role as a sales platform and ad seller. This creates unique conflicts of interest, as Amazon can favor its own products or charge hidden fees to advertisers.

What will be the consequences?

The potential consequences are enormous. Amazon could face millions in fines, forced changes to its business practices, and even the obligation to compensate affected advertisers. At the market level, an adverse decision could slow the growth of its advertising business, which has been one of its most profitable revenue streams. For advertisers, this could mean greater transparency and better metrics, but also a possible increase in costs if Amazon passes sanctions on to its fees. Consumers could benefit from more honest ads, although in the short term, regulatory uncertainty could affect advertising investment on the platform. Historically, similar cases against Google in 2011 resulted in $500 million fines and changes in advertising practices, but did not curb its growth. However, Amazon operates in a more complex environment, where advertising is intrinsically tied to product sales, which could amplify the impact.

What should readers know?

It is important to understand that this legal action has not yet been formalized; Gizmodo cites anonymous sources close to the case. The FTC has been investigating Amazon for years, and this lawsuit would be the culmination of those efforts. Readers should closely follow developments, as they could redefine the rules of the game for digital advertising. Additionally, this case adds to other antitrust disputes involving Amazon, such as the Washington state lawsuit and investigations in the European Union. In 2024, the FTC had already issued investigative orders to Amazon requesting documents on its advertising practices, indicating that the agency has been building its case meticulously. Small advertisers, who represent a significant portion of Amazon Ads customers, are most vulnerable to opaque practices, as they lack resources to audit campaign performance.

“The FTC is targeting the heart of Amazon's business model: its ability to sell ads opaquely. If successful, it will force Amazon to be more transparent, which would benefit small advertisers who have been at a disadvantage,” explains an analyst from TheVortiq.

Historical context

The FTC has already taken action against Google and Facebook for deceptive advertising practices, but Amazon's case is unique because the company is both a sales platform and an ad seller. This creates conflicts of interest, as Amazon can favor its own products or charge hidden fees. In 2023, the FTC sued Amazon over deceptive Prime subscriptions, and this new action would be another step in the regulatory offensive. Additionally, in 2024, the European Commission opened a formal investigation into Amazon's advertising practices, alleging that the company uses third-party seller data to target its own ads. This pattern of regulatory actions suggests that governments are taking coordinated steps to address the market power of big tech.

Market impact

Amazon's shares fell slightly after the news, but the market has not yet fully discounted the risk. If the lawsuit succeeds, it could affect the valuation of Amazon's advertising business, which some analysts estimate at over $100 billion. Competitors like Google and Meta could benefit if advertisers seek more transparent alternatives. However, it is important to note that Amazon's advertising has a unique advantage: it directly converts into sales, making it attractive for brands selling on the platform. Stricter regulation could reduce that advantage, but not eliminate it entirely. In the long term, this case could accelerate the adoption of transparency standards across the digital advertising industry, similar to what happened after the fines on Google and Facebook.