According to the US Federal Trade Commission, Amazon used an algorithm to covertly raise prices, making a $1 billion profit.
The US Federal Trade Commission (FTC) accused well-known online retailer Amazon.com of using illegal methods to raise prices and boost profits in a court filing on Thursday. A less-redacted version of the court proceedings in the US District Court in Seattle was made public, providing additional information on the complaint that the FTC had started in September.
The Federal Trade Commission (FTC) claims that Amazon used a secret algorithm known as "Project Nessie" to increase US household costs by more than $1 billion, as reported by Reuters.
Amazon created an internal algorithm known as "Project Nessie," which is not publicly known, to identify specific products for which it expected other online merchants to follow suit and raise their prices. According to the Federal Trade Commission, Amazon took over one billion dollars out of American customers' wallets through Project Nessie.
According to the complaint, Amazon started testing its pricing algorithm in 2010 to see if competing online merchants were keeping an eye on its pricing tactics and to raise prices on products that they knew competitors would be looking for.
When other merchants began to match or raise their pricing, Amazon continued to sell the product at a higher price, reportedly making an extra $1 billion in profit, according to Reuters.
According to the Federal Trade Commission (FTC), when the online retailer attracted greater attention from the media and consumers during high-visibility events like Prime Day deals and the Christmas shopping season, it temporarily halted using the algorithm.
According to Tim Doyle, a spokesman for Amazon, the Federal Trade Commission (FTC) has presented a seriously inaccurate picture of the pricing tool and has made it clear that the business stopped using it a number of years ago.
Doyle clarified that the purpose of "Nessie" was to stop situations in which price matching resulted in extraordinarily low and unsupportable costs.
Nessie's algorithm, on the other hand, has been branded as an unfair technique of competition by the FTC since it effectively pushes other online merchants to raise their prices.
Also Read: Apple CEO Tim Cook Optimistic About India as the Company Achieves All-Time Revenue Record