The e-commerce giant, Amazon, is at the center of an explosive controversy, as revealed by the United States Federal Trade Commission (FTC).
Accusations have surfaced alleging that the company used a secret algorithm, dubbed “Nessie Project“, to raise the prices of competitors’ products, resulting in exorbitant profits estimated at more than US$1 billion.
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“Project Nessie,” according to redacted portions of the FTC monopoly lawsuit, was allegedly employed by commerce to evaluate to what extent it could increase its prices, while competitors were forced to follow such price escalation.
This, in turn, would have led competitors to increase prices, harming them and their customers. consumers.
(Image: Shutterstock / Reproduction)
The algorithm, now deactivated, operated in a seemingly ingenious way. When competitors did not raise their prices to Amazon's level, the algorithm automatically restored the item's value to the original amount.
The process resulted in a vicious cycle that coerced rivals to raise their prices to compete with the technology giant. e-commerce.
Another shady strategy revealed involved what former employees describe as a “promotional spiral.” Amazon matched prices with competitors like Target.com during discount sales.
When Target ended its promotion, Amazon and other competitors continued to offer the reduced prices, creating fierce competition around lower values that ultimately harmed companies' profitability involved.
“FTC allegations grossly mischaracterize this tool,” said an Amazon spokesperson.
“‘Project Nessie’ had a simple purpose: to try to stop our price matching result in unusual results, where prices become so low that they are left unsustainable.
The project lasted a few years on a subset of products, but it didn't work as planned, so we scrapped it several years ago,” says the company spokesperson.
However, “Project Nessie” is just one of the examples mentioned in the FTC's complaint, which argues that Amazon's monopoly power has had broad impacts on retail consumer prices.
As the legal battle unfolds, Amazon is now under public scrutiny, and consumers are wondering whether the secret algorithm has affected their online spending.
This revelation brings into focus the growing importance of strict regulation and monitoring of Big tech companies as they shape the market and influence purchasing habits at scale global.
The outcome of this FTC lawsuit promises to be one of the most significant and anticipated cases in the US business landscape. U.S in years.
