Amazon shares extended losses on September 1 after the Federal Trade Commission filed a lawsuit accusing the company of manipulating its advertising auctions to inflate prices paid by sellers and brands.
The regulator, joined by a coalition of states, alleges that Amazon designed its ad systems to overcharge advertisers competing for placement on its retail platform. The complaint focuses on how auction prices were set, with claims that the outcomes were skewed against the businesses paying for visibility.
The suit adds to a growing set of legal challenges facing the company. Regulators have separately targeted Amazon’s treatment of third-party sellers and its logistics arrangements, and the latest action extends scrutiny to the advertising unit that has become one of the company’s fastest-growing revenue streams.
Investors reacted by pushing the stock lower during the session, though the reaction drew a sharp response from at least one prominent market voice. Jim Cramer, host of CNBC’s Mad Money and head of the network’s Investing Club, said dumping the shares over the filing would be an overreaction.
“Selling Amazon shares over the new FTC lawsuit would be hysterical,” Cramer said, arguing that the legal process would take years and that the advertising business remained central to the company’s earnings power.
The FTC has pursued Amazon on multiple fronts in recent years, part of a broader effort by the agency to test the reach of antitrust law against large technology platforms. A prior action brought by the commission and a group of states over ad auction pricing laid groundwork for the current dispute.
Amazon’s advertising division has expanded rapidly, generating tens of billions of dollars annually as sellers pay to promote products in search results and across the site. That growth has made the unit a target for both regulators and competitors who argue the company holds outsized control over how goods are surfaced to shoppers.
The company has not detailed its full response to the complaint. In past cases, Amazon has said its practices benefit customers through lower prices and wider selection, and has vowed to contest the allegations in court.
The case now moves into pretrial proceedings, a process that could stretch across several years before any ruling. A schedule for initial hearings has yet to be set.