Amazon’s $1 BILLION secret algorithm exposed: Retail giant accused of pushing up prices to encourage competitors to do the same in bombshell redacted claims from FTC anti-trust lawsuit
Amazon’s $1 BILLION Secret Algorithm Revealed: Retail Giant Accused of Gouging Up Prices to Encourage Competitors to Do the Same in Bombshell Redacted Claims from FTC Antitrust Case
Amazon is accused of adopting a secret algorithm to raise prices in a way that competitors would follow, boosting sales by $1 billion, insiders claim.
The tactic, called ‘Project Nessie’, effectively tested new price points for its products to see if it would encourage competitors to follow suit. If they didn’t, Amazon would automatically return the item to its original cost.
The claims are part of an antitrust lawsuit brought by the Federal Trade Commission (FTC). The case centers on concerns that Amazon – owned by Jeff Bezos, the world’s third richest man – has suppressed competition in the marketplace and harmed consumers by driving up prices.
In edited excerpts from the filing, seen by the Wall Street Journalformer employees claimed that the ‘Nessie algorithm’ also helped identify discounted prices offered by competitors.
For example, if Target.com were to lower the price of a product, Amazon would match this low cost and encourage other retailers to do the same.
Amazon has been accused of adopting a secret algorithm to raise prices in a way that competitors would follow, boosting their sales by $1 billion, insiders claim
The FTC lawsuit centers on concerns that Amazon — owned by Jeff Bezos, the third-richest man in the world — has stifled competition in the marketplace and harmed consumers by driving up prices. In the photo: Bezos with his fiancée Lauren Sánchez
Once Target.com ended the sale, Amazon and other competitors would be stuck with the low price to keep matching.
The tactic helped Amazon improve its margins and earned them more than $1 billion in revenue, according to a source at the company. WJ reported.
The company stopped using the algorithm in 2019, some employees said, although it remains unclear why.
The FTC lawsuit follows a four-year investigation into Amazon and is joined by 17 attorneys general.
It was filed Tuesday in federal court in Seattle, where Amazon is headquartered.
Officials accused the Silicon Valley company of anticompetitive practices, such as pushing sellers to lower prices on several websites.
They added that the company worsens the customer experience by replacing relevant search results with paid advertisements.
The FTC declined to comment on the redacted material in the complaint, but spokesman Douglas Farrar said Wall Street Journal: ‘We once again call on Amazon to take swift action to remove the redactions and show the American public the full extent of what we believe are their illegal monopolistic practices.’
The FTC said it had asked the court to issue a permanent injunction ordering Amazon to stop its unlawful conduct. Pictured: FTC Chairman Lina M Khan
But Amazon has so far responded to the allegations, claiming the FTC misunderstands how online pricing and competition work.
In a statement, attorney David Zapolsky said on behalf of the company: “If they were successful in this lawsuit, the result would be anti-competitive and anti-consumer because we would have to stop many of the things we do to offer low prices and draw attention to it. prices – a perverse outcome that would directly contradict the objectives of antitrust law.”
The original FTC filing also asked the court to consider forcing the online retailer to sell assets, hinting at a possible attempt to break up the online retail giant.
Many had wondered whether the agency would seek a forced breakup of the retail giant, which is also dominant in cloud computing and has a growing presence in other sectors such as groceries and healthcare.
In a briefing with reporters, FTC Chair Lina Khan dodged questions about whether the agency will push for a breakup.
“At this stage the focus is more on accountability,” she said.
DailyMail.com contacted Amazon for comment on the latest claims.