FTC To Sue Amazon for Deceptive Advertising, How Will Stock React?
The Federal Trade Commission (FTC) plans to sue Amazon on Monday, according to a report on the Wall Street Journal. Officials say the company quietly raised the minimum price sellers paid for ads on its store. The practice earned Amazon tens of billions of dollars over seven years.
More than 20 state attorneys general are joining. Investors did not wait for the complaint. Amazon shares fell over 3% on Monday afternoon, erasing roughly $86 billion in market value.
How the Alleged Ad Price Manipulation Worked
Sellers bid against each other every time a shopper searches. Amazon once ran an auction built to stop winners from overpaying. That design kept bids low.
In 2018, officials say, Amazon began placing a bid of its own. It sat just above the runner-up, so the winner paid more. Insiders called it a soft reserve.
Amazon could see every rival bid. It never told sellers about the change. Executives tracked the extra revenue and kept the details tightly held.
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