Amazon’s secret pricing algorithm, codenamed “Project Nessie,” may have earned the company more than $1 billion in additional profits, according to the British Daily Mail. New details have been released Thursday of the Federal Trade Commission’s antitrust case against the e-commerce giant.
In September, the Federal Trade Commission (FTC) and more than a dozen attorneys general filed a lawsuit against Amazon, alleging that the company operates an illegal monopoly. Among other claims, the complaint says Amazon buried its listings offered at lower prices than other retailers and charged sellers exorbitant fees in order to inflate product prices.
The existence of Project Nessie was first revealed in a previously redacted version of the complaint. Nessie is allegedly an algorithm that will increase the prices of products on Amazon and monitor whether other retailers, such as Target, follow suit. If they don’t, the algorithm will return the Amazon listing to its original price.
Amazon reportedly stopped using Nessie in 2019, but the FTC claims the company “repeatedly considered bringing it back on.”
These details have been redacted from the original case and Partially mentioned before The Wall Street Journal. On Thursday, a new version of the lawsuit was released with fewer redactions, providing the public with more insight into the FTC’s arguments and evidence. Last month, an Amazon spokesperson said the FTC was “wrong on the facts and the law.”
This includes claims outside the Nessie Project. According to the less redacted complaint, the FTC alleges that Amazon founder Jeff Bezos directed company executives to accept “unsolicited” advertising as a way to extract “billions of dollars through increased advertising despite the deterioration of its customer service.”
The company’s Prime membership program has also come under scrutiny by the Federal Trade Commission (FTC). In the new complaint, the FTC says Amazon had multiple opportunities to fix flaws in Prime’s subscription system and “instead continued to deceive more users into subscribing” to the service.
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