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Amazon’s secret pricing scheme brought in an additional $1 billion, FTC says

Amazon’s secret pricing algorithm, dubbed ‘Project Nessie,’ may have generated more than $1 billion in additional profits for the company, according to new details released Thursday, of the Federal Trade Commission’s antitrust case against the e-commerce giant.

In September, the FTC and more than a dozen attorneys general sued Amazon, claiming the company operated an illegal monopoly. Among other allegations, the complaint says Amazon buried deals offered at lower prices by other retailers and charged sellers high fees in order to inflate product prices.

The existence of the Nessie Project was first revealed in a previously redacted version of the complaint. Nessie was allegedly an algorithm that would increase the price of products on Amazon and monitor whether other retailers, like Target, would follow suit. If they didn’t, the algorithm would return the Amazon listing to its original price.

Amazon would have stopped using Nessie in 2019, but the FTC alleges the company “repeatedly considered turning it back on.”

These details were hidden on the original case and partially reported by The Wall Street Journal. On Thursday, a new version of the lawsuit was released with fewer redactions, giving the public a better look at the FTC’s arguments and evidence. Last month, an Amazon spokesperson said the FTC “got the facts and the law wrong.”

This includes allegations outside of The Nessie Project. According to the less redacted complaint, the FTC alleges that Amazon founder Jeff Bezos directed the company’s executives to accept “junk” ads as a way to extract “billions of dollars from increased advertising despite the deterioration of services offered to customers.

The company’s Prime membership program has also come under scrutiny by the FTC. In the new complaint, the FTC claims that Amazon had multiple opportunities to fix flaws in Prime’s registration system “and instead continued to entice more users to sign up” for the service.

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