Amazon Founder and CEO Jeff Bezos speaks to the media on the company’s sustainability efforts in Washington on September 19, 2019.
Eric Baradat | AFP | Getty Images
Amazon flooded its search results with irrelevant “defect” ads at the direction of Founder Jeff Bezos, pumping Amazon profits while steering shoppers to higher-priced goods, the Federal Trade Commission alleged in a newly unredacted portion of its antitrust lawsuit against the company.
“At a key meeting, Mr. Bezos directed his executives to ‘[a]ccept more defects’ as a way to increase the total number of advertisements shown and drive up Amazon’s advertising profits,” the FTC wrote in a now-public part of the complaint. The agency said that defect ads referred to those that that are irrelevant or only somewhat relevant to what a user is searching for.
The agency and 17 states sued the company in late September for allegedly using its monopoly power to increase prices across the web while degrading the shopping experience and excluding rivals. The FTC filed a less-redacted version of the complaint on Thursday, which reveals new details about the effect its growing advertising business has had on shoppers and sellers that use its site.
Amazon began running ads on its site over a decade ago, allowing brands and sellers to bid for higher placement in search results to have their product stand out from competitors. The unit has turned into a juggernaut, and one of Amazon’s higher-margin businesses.
Amazon General Counsel David Zapolsky called the initial complaint “wrong on the facts and the law,” and said its actions challenged by the FTC “have helped to spur competition and innovation across the retail industry, and have produced greater selection, lower prices, and faster delivery speeds for Amazon customers and greater opportunity for the many businesses that sell in Amazon’s store.”
Amazon did not immediately provide a statement on the claims against its advertising business, but Amazon spokesperson Tim Doyle disputed other aspects of the complaint made public Thursday.
A worse experience for users
According to the new version of the complaint, Amazon’s ads strategy worsened the shopping experience for users.
The proliferation of junk ads led to more relevant organic results being crowded out. In their place, shoppers were served up products that were “plainly not what the customer searched for,” such as an ad for a LA Lakers t-shirt in a search for a Seattle Seahawks t-shirt.
Other results were more puzzling. In one example collected by an Amazon executive, “Buck urine” showed up first in a search for water bottles.
Amazon weighed placing guardrails on ads in search results, but senior executives at the company ultimately determined they shouldn’t be “constrained” by limitations such as how relevant the products were to what shoppers search for.
Even though Amazon knew defect ads worsened the search experience, internal experiments showed the practice had no detrimental effect to its advertising revenue, and therefore its profits. The company went as far as incorporating a “cost of defect” into its ad auction system “to make the most money from its ad auctions.”
“With advertisements being so profitable to Amazon even at higher defect rates, senior Amazon executives agreed, ‘we’d be crazy not to’ increase the number of advertisements shown to shoppers,” the complaint states.
The increase in ads was not just annoying, according to the FTC. It also helped push shoppers toward higher-priced items.
An internal study at Amazon in 2018 found that the median price for sponsored products was higher than that of “neighboring organic content,” according to the complaint, which still redacted the percentage difference between the prices. For an undisclosed percentage of impressions, the study allegedly found, “the [Sponsored Products] price is at least twice that of the organic result.”
“‘[A]s the share of site real estate devoted to sponsored content grows, it becomes harder for customers to undo price effects’ by navigating to lower cost product listings,” the FTC wrote, quoting from the study. “Amazon’s economists also found that as advertising grew, ‘the price difference translates into a material impact on overall site ASP [average sales price].'”
Amazon’s ads strategy not only degraded the experience on the platform for shoppers, but also for third-party sellers, the agency alleges.
Amazon recognized that increasing the amount of advertising drove up the amount it took sellers to get their products in front of shoppers, the FTC alleged. And an Amazon executive explained that the cost, “is likely to be passed down to the customer and result in higher prices for customers,” according to the complaint.
The FTC said that based on public reports, though Amazon engineers found a short-term dip in the number of customers who made purchases when sponsored ads were given prominent placement, those effects “are vastly outweighed in the short term by ad revenue,” the team allegedly said.
A United Launch Alliance Atlas V rocket is on the launch pad carrying Amazon’s Project Kuiper internet network satellites, which are expected to eventually rival Elon Musk’s Starlink system, at the Cape Canaveral Space Force Station in Cape Canaveral, Florida, U.S., April 9, 2025.
Steve Nesius | Reuters
Amazon on Monday launched the first batch of its Kuiper internet satellites into space after an earlier attempt was scrubbed due to inclement weather.
A United Launch Alliance rocket carrying 27 Kuiper satellites lifted off from a launchpad at the Cape Canaveral Space Force Station in Florida shortly after 7 p.m. eastern, according to a livestream.
“We had a nice smooth countdown, beautiful weather, beautiful liftoff, and Atlas V is on its way to orbit to take those 27 Kuiper satellites, put them on their way and really start this new era in internet connectivity,” Caleb Weiss, a systems engineer at ULA, said on the livestream following the launch.
The satellites are expected to separate from the rocket roughly 280 miles above Earth’s surface, at which point Amazon will look to confirm the satellites can independently maneuver and communicate with its employees on the ground.
Six years ago Amazon unveiled its plans to build a constellation of internet-beaming satellites in low Earth orbit, called Project Kuiper. The service will compete directly with Elon Musk’s Starlink, which currently dominates the market and has 8,000 satellites in orbit.
The first Kuiper mission kicks off what will need to become a steady cadence of launches in order for Amazon to meet a deadline set by the Federal Communications Commission. The agency expects the company to have half of its total constellation, or 1,618 satellites, up in the air by July 2026.
Amazon has booked more than 80 launches to deploy dozens of satellites at a time. In addition to ULA, its launch partners include Musk’s SpaceX (parent company of Starlink), European company Arianespace and Jeff Bezos’ space exploration startup Blue Origin.
Amazon is spending as much as $10 billion to build the Kuiper network. It hopes to begin commercial service for consumers, enterprises and government later this year.
In his shareholder letter earlier this month, Amazon CEO Andy Jassy said Kuiper will require upfront investment at first, but eventually the company expects it to be “a meaningful operating income and ROIC business for us.” ROIC stands for return on invested capital.
Investors will be listening for any commentary around further capex spend on Kuiper when Amazon reports first-quarter earnings after the bell on Thursday.
Larry Ellison, co-founder and executive chairman of Oracle Corp., speaks during the Oracle OpenWorld 2018 conference in San Francisco, California, U.S., on Monday, Oct. 22, 2018.
David Paul Morris | Bloomberg | Getty Images
Oracle engineers mistakenly triggered a five-day software outage at a number of Community Health Systems hospitals, causing the facilities to temporarily return to paper-based patient records.
CHS told CNBC that the outage involving Oracle Health, the company’s electronic health record (EHR) system, affected “several” hospitals, leading them to activate “downtime procedures.” Trade publication Becker’s Hospital Review reported that 45 hospitals were hit.
The outage began on April 23, after engineers conducting maintenance work mistakenly deleted critical storage connected to a key database, a CHS spokesperson said in a statement. The outage was resolved on Monday, and was not related to a cyberattack or other security incident.
CHS is based in Tennessee and includes 72 hospitals in 14 states, according to the medical system’s website.
“Despite this being a major outage, our hospitals were able to maintain services with no material impact,” the spokesperson said. “We are proud of our clinical and support teams who worked through the multi-day outage with professionalism and a commitment to delivering high-quality, safe care for patients.”
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Oracle stock this year
Oracle didn’t immediately respond to CNBC’s request for comment.
An EHR is a digital version of a patient’s medical history that’s updated by doctors and nurses. It’s crucial software within the U.S. health-care system, and outages can cause serious disruptions to patient care. Oracle acquired EHR vendor Cerner in 2022 for $28.3 billion, becoming the second-biggest player in the market, behind Epic Systems.
Now that Oracle’s systems are back online, CHS said that the impacted hospitals are working to “re-establish full functionality and return to normal operations and procedures.”
Oracle’s CHS error comes weeks after the company’s federal electronic health record experienced a nationwide outage. Oracle has struggled with a thorny, years-long EHR rollout with the Department of Veterans Affairs, marred by patient safety concerns. The agency launched a strategic review of Cerner in 2021, before Oracle’s acquisition, and it temporarily paused deployment of the software in 2023.
Against a volatile market backdrop, the software maker’s stock has gained 45% and is the best performer among companies valued at $5 billion or more, according to FactSet. The closest tech names are VeriSign, up 33%, Okta, up 30%, Robinhood, up 29%, and Uber, up 29%.
“When you think about macroeconomic concerns, you as a company need to be more efficient, and this is where Palantir thrives,” said Bank of America analyst Mariana Pérez Mora.
Palantir has set itself apart in the software world for its artificial-intelligence-enabled tools, gaining recognition for its defense and software contracts with key U.S. government agencies, including the military. In the fourth quarter, its government revenues jumped 45% year-over-year to $343 million.
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Companies have faced immense volatility in 2025 as tariffs threaten to jeopardize global supply chains and halt day-to-day manufacturing operations by hiking costs. Those fears have brought the broad market index down about 7% this year, while the tech-heavy Nasdaq Composite has slumped 11%.
At the same time, the Trump administration has clamped down on government spending, giving Tesla CEO Elon Musk‘s Department of Government Efficiency freedom to slash public sector costs. Some administration officials have touted shifting dollars from consulting contracts to commercial software providers like Palantir, said William Blair analyst Louie DiPalma.
“Palantir’s business model is highly aligned with the priorities of the Trump administration in terms of increasing agility and being very quick to market,” he said.
That’s put Palantir in the league with major contractors such as Lockheed Martin and Northrop Grumman, which have outperformed in this year’s downdraft. Many companies in the space are also looking to partner with the firm and tend to flock to defense during recessionary times, DiPalma said.
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Palantir vs. the Nasdaq Composite
CEO Alex Karp has also been a vocal supporter of American innovation and the company’s central role in helping prop up what he called the “single best tech scene in the world” during an interview with CNBC earlier this year. Karp also told CNBC that the U.S. needs an “all-country effort” to compete against emerging adversaries.
But the ride for Palantir has been far from smooth, and shares have been susceptible to volatile swings. Shares sold off nearly 14% during the week that Trump first announced tariffs. Shares rocketed 22% one day in February on strong earnings.
Its inclusion in more passive and quant funds over the years and the growing attention of retail traders has added to that turbulence, DiPalma said. Last year, the company joined both the S&P and Nasdaq. Palantir trades at one of the highest price-to-earnings multiples in software and last traded at 185 times earnings over the next twelve months. That puts a steep bar on the stock.