Shillong, October 4: Reports have emerged suggesting that Amazon, the e-commerce giant, employed a clandestine algorithm to assess the extent to which it could increase prices on its platform, allegedly contributing to increased profits.
According to The Wall Street Journal, which cited redacted portions of the Federal Trade Commission (FTC) monopoly lawsuit against Amazon, the company utilized the ‘Project Nessie’ algorithm to hike prices in a manner that would lead competitors to follow suit.
If rival retailers maintained lower prices, the algorithm would automatically restore Amazon’s prices to their usual levels, the report stated.
‘Project Nessie’ supposedly played a role in artificially inflating prices across various shopping categories, ultimately bolstering Amazon’s profits. However, it’s worth noting that the company reportedly ceased using this secret algorithm in 2019.
An FTC spokesperson was quoted as saying, “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.”
The FTC, led by Lina Khan, along with 17 state Attorneys General in the US, filed a lawsuit against Amazon last month. They allege that the online retail and technology giant is a monopolist that employs a range of interconnected anti-competitive and unfair strategies to unlawfully maintain its monopoly power.
The FTC and its state counterparts claim that Amazon’s actions enable it to prevent rivals and sellers from reducing prices, compromise quality for shoppers, overcharge sellers, hinder innovation, and impede fair competition against Amazon.
FTC Chair Khan stated, “Our complaint lays out how Amazon has used a set of punitive and coercive tactics to unlawfully maintain its monopolies. 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.”
