Amazon.com Inc (NASDAQ:AMZN) shares are falling on Tuesday, continuing to feel pressure after the Federal Trade Commission announced a lawsuit against the company.
- Amazon.com stock is showing weakness. Why are AMZN shares declining?
FTC Sues Amazon Over Alleged Ad Price Manipulation
Federal regulators, backed by 22 states, brought a case against Amazon on Monday centered on claims that the company ran a hidden pricing scheme inside its own advertising marketplace for well over seven years. According to the filing, more than a million businesses that bought ad placements on Amazon, over half a million of them small or midsize operations, ended up paying inflated rates that collectively funneled tens of billions of dollars back to the company.
FTC Chairman Andrew Ferguson said conduct like this from a retailer of Amazon’s size “can be staggering” in its reach, contending that advertisers were duped into overpaying in ways that ultimately trickled down into higher prices for shoppers.
Regulators say Amazon marketed its ad placements for years as running through a conventional bidding system where the winner pays just a hair above whatever the runner-up offered. Behind the scenes, though, the agency claims Amazon quietly built in an extra charge beginning in 2019, something the company’s own paperwork labeled a “soft reserve price.”
Investigators point to that shift as the reason advertisers increasingly ended up paying their exact bid rather than a discounted rate, a share that reportedly went from somewhere in the 30% to 40% neighborhood in 2021 up to nearly 80% by 2024, all while Amazon allegedly kept the change hidden from the businesses affected.
Amazon Pushes Back Hard Against the FTC’s Claims
Amazon issued a lengthy rebuttal Monday, arguing the case mischaracterizes its advertising business and insisting neither shoppers nor advertisers were harmed. The company pointed to its own pricing data as evidence, noting that per-click costs on its Sponsored Products search ads held roughly flat once adjusted for inflation between 2019 and 2024, even as average winning bids dropped by half over that same period. Amazon also said roughly 92% of its ad placements go to bidders other than the highest offer, since its ranking system weighs relevance alongside price, and pegged the resulting savings to advertisers at more than $8 billion across 2021 through 2025.
The company further argued that its bidding structure, a form of second-price auction it describes as a long-running industry norm, guarantees an advertiser never pays above their own bid. Amazon said the FTC’s complaint, despite spanning more than 150 pages, fails to produce evidence that consumer prices climbed and gives the topic minimal attention, while also mischaracterizing how advertisers actually set and adjust their bidding behavior.
Amazon’s Chart Shows a Near-Term Pause Within a Longer Uptrend
Despite today’s decline, Amazon’s broader bullish technical setup remains intact. The stock is holding roughly 6.6% above its 200-day trend line at $238.78, and the 50-day marker has stayed on top of the 200-day ever since a golden cross showed up back in May, evidence that the longer-running climb hasn’t cracked yet.
Zooming into the past few weeks tells a different story. The shares have slipped about 3.8% under their 20-day average of $264.53, a sign that momentum has cooled off following a run that produced both a swing high and a fresh 52-week peak in August. Where things stand on relative strength doesn’t offer much clarity either, sitting at 46.59, a middling number that tends to show up when a stock drifts sideways while traders can’t agree on whether this is just a breather or the beginning of a rougher stretch.
$258 marks the level bulls need to clear to feel comfortable again, sitting close enough to the stock’s near-term averages that previous attempts to push through it have fizzled out. On the flip side, $226 is the number that matters most if selling picks back up, representing the more consequential floor should the current dip turn into something bigger. selling picks back up, representing the more consequential floor should the current dip turn into something bigger.
AMZN Shares Are Dipping
AMZN Price Action: Amazon.com shares were down 1.80% at $255.09 at the time of publication on Tuesday, according to Benzinga Pro.
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