Amazon used an algorithm code, dubbed “Project Nessie,” to test how much it could raise prices in a way that competitors would emulate, according to redacted portions of the Federal Trade Commission’s (FTC) monopoly lawsuit against the company.
The algorithm allowed Amazon to improve its profit on items across numerous shopping categories. In turn, competitors mimicking the retail giant raised their prices and charged customers more for products, according to people familiar with the allegations, says The Wall Street Journal.
In cases where competitors didn’t increase the cost of a specific item to match Amazon, the algorithm would automatically return the product to its original Amazon price, according to The Wall Street Journal.
Project Nessie also helped Amazon match discounted prices offered by major competitors. After the competing businesses ended their sales, Amazon would keep their low prices locked in to undercut the other company, explained former employees who worked for the pricing team and on the algorithm.
“The FTC’s allegations grossly mischaracterize this tool,” said an Amazon spokesperson. “Project Nessie was a project with a simple purpose — to try to stop our price matching from resulting in unusual outcomes where prices became so low that they were unsustainable. The project ran for a few years on a subset of products but didn’t work as intended, so we scrapped it several years ago.”
The FTC did not comment on the redacted material in the complaint.
