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FTC: Amazon Had a Secret Tool to Drive Up Prices

AmazonThe FTC and 17 states recently sued Amazon for using its monopolistic power to the detriment of its third party sellers, competitors, and customers.

Amazon uses a number of tactics to punish its own third-party sellers who offer lower prices outside of Amazon.

According to the complaint, the sanctions Amazon levies on sellers vary and can include:


Amazon knocks these sellers out of the all important “Buy Box,” the display from which a shopper can “Add to Cart” or “Buy Now” … Nearly 98% of Amazon sales are made through the Buy Box and, as Amazon internally recognizes, eliminating a seller from the Buy Box causes that seller’s sales to “tank.”

Another form of punishment is to bury discounting sellers so far down in Amazon’s search results that they become effectively invisible.

If a competitor lowers a price, Amazon often lowers its price to the penny to instantly blunt the competitor’s advantage.

Part of its plan to keep prices high involved a covert strategy called “Project Nessie” which the FTC says resulted in Amazon pocketing more than a billion dollars from American’s pocketbooks.


Project Nessie predicted the likelihood that the online store or stores offering the lowest price for a given product would follow an Amazon price increase. Armed with these predictions, [Amazon] increased products’ prices when those price hikes were most likely to be followed [by the competitor]. After Amazon successfully induced the other online store to raise its price, Amazon continued to sell the product at the now-inflated price.

Project Nessie generated enormous profits for Amazon even though its higher prices caused Amazon’s unit sales to decrease. But in 2019 when regulators started snooping around, the company put Project Nessie on hold.

This will be a long, complicated case, and it is anyone’s guess how it turns out and if shoppers ultimately will see lower prices in the marketplace as a result of real competition.

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4 thoughts on “FTC: Amazon Had a Secret Tool to Drive Up Prices”

  1. Amazon just sent an email. The subject is “Stay safe by learning to identify and avoid impersonation schemes.” No mention of “pricing schemes.” Maybe that email is coming tomorrow. Oh, the irony.

  2. I actually heard about this back in 2021 and just now the FTC is getting around to suing them? Project Nessie, promoted listings, fake reviews, treating employees like slaves are all part of Bezos’s greed. Here’s a little excerpt: Jeff Bezos, the founder of Amazon and owner of the Washington Post, has accumulated a fortune worth $150 billion. That is the biggest nominal amount in modern history, and extraordinary any way you slice it. Bezos is the world’s lone hectobillionaire. He is worth nearly two million times over what the average American family is worth. He has about 50 percent more money than Bill Gates, twice as much as Mark Zuckerberg, 50 times as much as Oprah, and perhaps 100 times as much as Trump. He has gotten $50 billion richer in less than a year. He needs to spend roughly $28 million a day just to keep from accumulating more wealth.

  3. I have now decided, that when I find something on Amazon I want, I will go directly to the company’s website to see if I can get it cheaper there.

  4. I was a fan of Amazon when they sold just books. I hate them now. Never been a Prime member and never buy from them now.

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