Amazon made $1B with Project Nessie secret algorithm: FTC lawsuit

The Federal Trade Commission in new court documents said Amazon deliberately raised prices by more than $1 billion through secret algorithms known as “Project Nessie.”

The FTC filed suit in September but many details were withheld from public view until Thursday when a version of the lawsuit with fewer redactions was made public in US District Court in Seattle.

The FTC said Amazon created a “secret algorithm internally code-named ‘Project Nessie’ to identify specific products for which it predicts other online stores will follow Amazon’s price increases. … Amazon used Project Nessie to extract more than a billion dollars directly from Americans’ pocketbooks.”

Amazon spokesman Tim Doyle said the FTC “grossly mischaracterizes” the pricing tool and the company stopped using it several years ago.

“Nessie was used to try to stop our price matching from resulting in unusual outcomes where prices became so low that they were unsustainable,” Doyle said.

The FTC said that “while Project Nessie is currently paused, Amazon could turn it back on at any time. Indeed, Amazon has repeatedly considered turning it back on — and there are no obstacles preventing Amazon from doing so.”

The FTC said Amazon began using Nessie in 2014, and by 2018, Amazon used it to set prices that were viewed by shoppers more than 400 million times. Amazon in April 2018 used it to set prices for more than 8 million items purchased by customers that collectively cost almost $194 million, the complaint said.