Amazon made $1 billion using price-raising algorithms.
Amazon, the Federal Trade Commission (FTC) of the United States has asserted that Amazon artificially hiked prices by more than $1 billion using proprietary algorithms.
Details from the FTC’s September case against Amazon were made public on Thursday, when a new version of the lawsuit with fewer redactions was made available in a Seattle court. The FTC said that developed a “secret algorithm internally codenamed ‘Project Nessie’ to identify specific products for which it predicts other online stores will follow price increases,” according to Reuters.
The FTC also claimed that officials at the business deleted messages on the texting software Signal on purpose. They employed a tool that deletes messages in an act that “destroyed more than two years” worth of communications from June 2019 to “at least early 2022,” despite the trade commission’s request.
The FTC and 17 states sued Amazon in September, alleging that the corporation was abusing its market dominance to increase prices on and off its platform, while overcharging vendors and limiting competition. This accuses the e-commerce behemoth of breaking federal and state antitrust laws.
Amazon stated in a response issued in September that the case will result in increased costs and slower deliveries for consumers, as well as harm to companies. “If successful, (the lawsuit would) force to engage in practises that actually harm consumers and the many businesses that sell in our store—such as having to feature higher prices, offer slower or less reliable Prime shipping, and make Prime more expensive and less convenient,” said David Zapolsky, Senior Vice President, Global Public Policy & General Counsel at Amazon.
According to The Register, began investigating whether other online stores’ pricing algorithms were following the prices established by first-party retail arm, where the corporation directly controls prices, in the early 2010s. The company discovered that it could raise its costs while lowering the chance of customers finding the identical things cheaper on Amazon. This would be achievable if the corporation concentrated its price increases on products sold by competitors at prices comparable to. This was the start of Project Nessie.