Amazon is using illegal strategies and an algorithm that netted it more than $1 billion reports Reuters.
The revelation comes from a new court filing, released by the U.S. District Court in Seattle, which had fewer redactions than a previous version. The U.S. Federal Trade Commission (FTC) filed the suit in September.
The FTC said the Project Nessie algorithm allowed the retailer “to extract more than a billion dollars directly from Americans’ pocketbooks,” calling it an “unfair method of competition” because it manipulates other online stores into raising prices, allowing Amazon to do the same.
“The sole purpose of Project Nessie was to further hike consumer prices by manipulating other online stores into raising their prices,” the FTC alleged.
According to the regulator, Amazon claims that it has currently paused the project but the company can turn it on at any time, as last year, fearing inflation could hurt Amazon’s profitability, Doug Herrington, CEO of Worldwide Amazon Stores, allegedly asked to turn on “[o]ur old friend Nessie, perhaps with some new targeting logic” to boost profits for Amazon’s retail unit.
In addition, the FTC alleged that under then-CEO Jeff Bezos‘s direction, the company flooded its online store with “pay-to-play advertisements” and “irrelevant junk ads” despite knowing that these junk ads were “defects.”
The FTC alleges that Amazon executives know that the practice creates “harm to consumers” by displaying less relevant search results.
The complaint also accuses Amazon of hiding operations from antitrust enforcers and destroying office communications. In a section of the lawsuit that remains heavily redacted, Amazon allegedly deterred Walmart from offering discounts to online shoppers who picked up their purchases from stores.
–Metro Voice and wire services