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Amazon Accused of Manipulating Prices with Secret Algorithm

Amazon's covert Project Nessie algorithm reportedly gauges how much the company can raise its prices before competitors stop increasing theirs.

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A recent report from The Wall Street Journal exposed that had implemented a concealed algorithm known as Project Nessie. The algorithm was reportedly used to monitor how much the firm could inflate its prices before its competitors ceased to increment their own. The report aligns with the Federal Trade Commission's (FTC) statement last month accusing Amazon of US antitrust law violation through Project Nessie, although the FTC's complaint featured considerable redactions.

Alleged Price Manipulation Algorithm

First reported at the end of last month, Project Nessie reportedly increased Amazon's prices, tracking whether rival retailers such as Target would respond in kind. If competitors did not adjust their prices to match Amazon's, the algorithm was programmed to revert Amazon's prices to their original level. The secret pricing technique allegedly permitted Amazon to artificially inflate prices across a range of categories, thus augmenting its profits. Allegedly, the use of Project Nessie was discontinued in 2019.

FTC's Antitrust Allegations and Amazon's Response

Adding to a string of accusations, the Federal Trade Commission contends that Amazon has unlawfully maintained its influential presence in the market. In a complaint filed in September, the FTC claimed that Amazon has exploited a few strategies, such as befuddling listings, to dissuade sellers from offering products at lower prices on competing platforms.

The complaint details how Amazon allegedly breaks the law by stopping its rivals from growing and new ones from entering the market. The FTC and states say that Amazon's actions have a wide-ranging impact, affecting hundreds of billions of dollars in retail sales every year, influencing the prices and quality of hundreds of thousands of products, and touching over a hundred million shoppers. Responding to the complaint, Amazon contended that the “FTC was wrong on the facts and the law.” The tech giant expressed its readiness to provide evidence against these charges in court.

UK Investigation into Cloud Dominance

Earlier today, I reported how Microsoft and Amazon are at the center of an investigation in the UK over cloud practices. Research done by telecommunications watchdog Ofcom has shown some problems that customers face when they switch to and use multiple cloud suppliers. Some of these problems are high costs related to moving data out of cloud facilities, reasons to use only one cloud provider, and technical barriers in switching between cloud providers. Ofcom also expressed their worries about the software licensing practices of cloud providers, especially .

Luke Jones
Luke Jones
Luke has been writing about all things tech for more than five years. He is following Microsoft closely to bring you the latest news about Windows, Office, Azure, Skype, HoloLens and all the rest of their products.

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