Amazon’s secret pricing algorithm boosted profits by billions, FTC alleges

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The Federal Trade Commission (FTC) has accused Amazon of using a secret pricing algorithm to raise prices for consumers. In a heavily redacted section of its antitrust complaint against Amazon, the FTC alleges that Amazon used the algorithm, codenamed Project Nessie, to test how high it could raise prices before competitors stopped raising theirs.

According to The Wall Street Journal, Project Nessie worked by automatically raising prices on items and monitoring whether competitors followed suit. If competitors didn’t raise their prices, the algorithm would automatically revert Amazon’s price to its original level.

The FTC alleges that Project Nessie helped Amazon increase its profits by billions of dollars. “Project Nessie has no valid and cognizable justification other than to stifle competition,” the FTC’s complaint states.

Amazon has denied the FTC’s allegations, saying that Project Nessie was a “simple project” designed to prevent prices from becoming “unsustainable.” The company says that it scrapped the project several years ago because it didn’t work as intended.

The sources for this piece include an article in TechSpot.

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