Amazon could face billions in fines as the FTC eyes its ad business

At a glance:

• The FTC has drafted a potential complaint accusing Amazon of misleading advertisers over sponsored listing pricing
• State attorneys general involvement could multiply penalties to billions of dollars per consumer-protection laws
• Amazon's ad business generated $68.6bn in 2025, making it the third-largest online ad seller behind Google

Regulatory scrutiny intensifies over Amazon advertising practices

Amazon's advertising business has emerged as a quiet money machine for the e-commerce giant, generating $68.6 billion in revenue in 2025 alone and establishing itself as the third-largest online advertising seller behind Google. However, this lucrative revenue stream may now be becoming the company's next major regulatory headache. According to a Bloomberg report from June 16 citing people familiar with the matter, the US Federal Trade Commission has drafted a potential complaint that could lead to billions of dollars in civil penalties.

While no formal complaint has been filed yet, and both the FTC and Amazon declined to comment on the matter, the report signals where regulators are focusing their attention. The investigation centers on whether Amazon properly disclosed the terms and pricing of its sponsored listings—those prominent ads that appear at the top of search results when users look for products. The core concern involves 'reserve pricing,' which are price floors that advertisers must meet to win ad slots. If these reserve prices are not clearly communicated, advertisers might continuously raise their bids without knowing they're competing against invisible thresholds, ultimately directing more advertising spend toward Amazon.

State-level enforcement multiplies potential penalties

The real threat to Amazon lies in the involvement of multiple state attorneys general, whose participation transforms what might be a manageable federal fine into a potentially devastating multibillion-dollar liability. While the FTC's own authority to extract cash penalties is relatively limited, state consumer-protection laws allow fines of tens of thousands of dollars per violation, per day. When multiplied across the enormous volume of advertisements Amazon serves daily, these figures rapidly escalate into the billions. This mechanism explains how regulatory experts arrive at the staggering financial exposure estimates.

The agency could potentially wrap up this matter as early as this summer through either litigation or settlement, though it would require votes from the FTC's two Republican commissioners—Andrew Ferguson and Mark Meador—before proceeding. The combination of federal oversight and state-level enforcement creates a formidable legal challenge that could significantly impact Amazon's advertising operations and profitability.

Mounting regulatory pressure across multiple fronts

This investigation represents just the latest chapter in Amazon's ongoing regulatory challenges. Last autumn, the company agreed to pay $2.5 billion to settle claims that it had tricked consumers into Prime subscriptions, marking one of the largest consumer protection settlements in FTC history. Additionally, a separate antitrust trial is scheduled for early 2027, focusing on allegations that Amazon pressured brands to raise prices at competing retailers.

An advertising-related case would establish a third major regulatory front for Amazon, coming at a particularly vulnerable time. The company has increasingly relied on advertising revenue as growth in its core e-commerce business has slowed. With advertising becoming one of Amazon's fastest-growing business lines, any significant disruption to this revenue stream could have substantial implications for the company's financial performance and market position. The drafted complaint, while still preliminary and based on anonymous sources, points directly at the business segment Amazon can least afford to see disrupted.