The US Federal Trade Commission has filed a lawsuit against Amazon alleging that the ecommerce behemoth deceived advertisers by manipulating the prices they paid to promote products on its platform. The lawsuit, filed in federal court in Seattle on Monday, alongside a bipartisan group of states, claims that Amazon illegally acquired $20bn from "unwitting advertising customers". Amazon stock fell around 1 per cent following news of the lawsuit.

The scheme led to "substantial overcharges and cost increases" paid by some 1.2mn US advertising customers, including more than 500,000 small and medium-sized businesses, according to the complaint. "A significant portion of these costs, including the advertising costs paid by Amazon sellers, are ultimately passed through to and paid by Amazon shoppers in the form of higher prices," the lawsuit reads. Monday's suit marks the consumer and competition watchdog's third significant federal lawsuit against Amazon, as the federal government has taken an aggressive enforcement stance towards Big Tech in recent years. Amazon said in a statement that the FTC's claims "fundamentally misunderstand" how advertisers operate and that its practices had not resulted in higher costs for consumers or advertisers.