FTC Investigates Amazon and Google Over Search Ad Practices

The U.S. Federal Trade Commission has launched probes into Amazon (Zorrox: AMAZON.) and Google parent Alphabet (Zorrox: GOOGLE.) over whether their search advertising practices misled advertisers. The investigations examine ad pricing transparency, disclosure of auction rules, and the use of reserve pricing. Both cases add to mounting regulatory pressure on two of the world’s most influential tech firms.

What Regulators Are Examining

Amazon’s inquiry focuses on “reserve pricing” in ad auctions, the minimum bid required for ads to appear. Critics argue advertisers were not clearly informed about when and how these thresholds apply. Google faces scrutiny over internal pricing adjustments and changes to ad auction structures that advertisers say were not communicated transparently.

The investigations remain nonpublic and involve document requests and witness testimony. Neither company has commented. The probes build on previous antitrust findings against Google related to dominance in ad tech markets, as well as continuing FTC litigation targeting Amazon’s broader marketplace practices.

Regulatory Context

Earlier in 2025, courts ruled that Google held illegal monopolies in key ad tech segments, forcing divestitures and contract changes. Amazon has separately faced claims of anticompetitive conduct in its marketplace and allegations of misleading subscription practices. The FTC’s new actions reflect a broader push to constrain big tech influence across advertising and retail.

Market and Advertiser Impact

News of the probes rattled markets, pressuring ad-dependent stocks. Some advertisers have paused long-term budget commitments pending clarity on auction mechanics and pricing disclosure. Smaller advertisers in particular worry that hidden costs could erode returns on digital campaigns.

Investors are weighing the potential for fines, mandated disclosures, or structural changes that could lift compliance costs and undermine margins. For Amazon, advertising is an increasingly critical profit driver. For Google, already under antitrust orders, additional regulatory risk threatens its ad business strategy.

Strategic Risks

The probes pose risks across four fronts: revenue transparency, competitive dynamics, regulatory costs, and advertiser trust. Any perception that Amazon or Google misled clients could encourage budget shifts to rivals like Microsoft or Meta. At stake is both near-term profitability and longer-term credibility in the digital ad market.

Tips for Traders

• Watch Amazon (Zorrox: AMAZON.) and Alphabet (Zorrox: GOOGLE.) for regulatory headlines; volatility may spike around FTC filings or disclosures.

• Track ad revenue and margin guidance in upcoming earnings; weaker advertiser confidence could weigh on both stocks.

• Monitor rivals’ ad platforms for evidence of market share gains as advertisers diversify spend.

• Consider regulatory risk premiums in valuations; fines or mandated changes could lower profit forecasts.

• Use options strategies to hedge exposure to big tech regulatory shocks.