Amazon accused of price gouging with Project Nessie algorithm

An explosive report has reported that Amazon has allegedly used an algorithm to inflate prices on products behind the scenes.

Amazon has come under fire following the publication of a new report. It revealed that the online storefront was allegedly using an algorithm to alter prices.

“Project Nessie” is Amazon’s secret algorithm that permeates through the whole site, according to the new Wall Street Journal report. It monitors pricing on the site and will steadily increase prices. If other sites don’t respond by also increasing the price, then it’ll revert the pricing back to normal.

The company did stop using Nessie in 2019, however, it’s unknown if another piece of software has taken its place within Amazon.

Nessie has come to light through the FTC’s lawsuit and complaint regarding Amazon’s monopoly on e-commerce. Heavily redacted documents appear to point towards a Project Nessie.

Amazon’s profits benefited from Nessie, with the intention to improve margins. In the lawsuit documents, the FTC had redacted estimates that the company has “extracted from American households.”

Speaking with the Wall Street Journal, an Amazon staffer said:

“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.”

FTC and Amazon go head-to-head over algorithm price gouging

The FTC now demanding that Amazon remove portions of the redacted information. Speaking with the Wall Street Journal, FTC spokesperson Douglas Farrar said:

“We once again call on Amazon to move swiftly to remove the redactions and allow the American public to see the full scope of what we allege are their illegal monopolistic practices.”

Another of Amazon’s responses to the accusations said:

“[The FTC is] wrong on the facts and the law and we look forward to making that case in court.”

This revelation comes as Google’s algorithm allegedly alters search results for profit, according to a report from Wired.