November 3, 2023
In a new filing, the FTC alleges that Amazon used a secret algorithm to raise prices on millions of items, generating over $1 billion in excess profits.
The algorithm, codenamed “Project Nessie,” would identify products that other retailers were likely to track and then raise the price on Amazon. If other retailers didn’t follow suit, Amazon would revert the price to its original amount.
The FTC claims that Nessie is an unfair method of competition that led to raised prices for consumers. Amazon says that Nessie was used to stop its price matching from resulting in unsustainable prices.
The FTC also alleges that Amazon founder Jeff Bezos directed company executives to accept “junk” ads as a means of extracting “billions of dollars through increased advertising despite worsening its services for customers.” But Amazon says that its customer experience is consistently positive and that its ads are the most relevant in the world.
The FTC also criticizes Amazon’s Prime membership program, saying that the company has had multiple opportunities to fix flaws in the signup system but has instead continued to “trick more users into signing up” for the service.
The sources for this piece include articles in Reuters and TheVerge.
