Amazon’s Secret Weapon For Outsmarting E-Commerce Revealed

Amazon deployed a secret algorithm to gauge how high it could raise prices before its competitors stopped increasing their prices as well, according to a new report from The Wall Street Journal Tuesday.

The existence of the algorithm, codenamed Project Nessie, was first revealed late last month in a complaint filed by the Federal Trade Commission accusing the e-commerce giant of violating US antitrust law. The FTC’s public complaint alluded to Project Nessie, but the section was heavily redacted. According to the Journal, Nessie would inflate prices and monitor whether other retailers, like Target, would follow suit. If the competing retailers maintained the lower price, the algorithm would automatically revert Amazon’s to its normal price.

Nessie allegedly helped Amazon increase its profits by artificially increasing its prices across different shopping categories until the company reportedly stopped using it in 2019. 

“We once again call on Amazon to move swiftly to remove the redactions and allow the American public to see the full scope of what we allege are their illegal monopolistic practices,” FTC spokesperson Douglas Farrar told the Journal Tuesday.

Project Nessie is just one of many ways the FTC has accused Amazon of illegally maintaining its market dominance in the e-commerce industry. In the agency’s September complaint, the company is accused of using a variety of methods, like burying listings, to deter sellers from offering products at a lower price on competing platforms. 

“The complaint sets forth detailed allegations noting how Amazon is now exploiting its monopoly power to enrich itself while raising prices and degrading service for the tens of millions of American families who shop on its platform and the hundreds of thousands of businesses that rely on Amazon to reach them,” FTC Chair Lina Khan said in a statement last month.

Responding to the suit, Amazon said that the FTC was “wrong on the facts and the law and we look forward to making that case in court.”

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