FTC Accuses Amazon Of Squeezing Extra $1 Billion From Consumers Through Its e-Commerce Monopoly

The FTC is going full throttle against Amazon and has accused the company of extracting a whopping extra $1 billion from its clients, thanks to its monopoly behavior in the e-commerce sector.

The tech giant is being called out by the regulatory body for taking advantage of its dominance and using its algorithm to raise prices for a long list of popular consumer products.

This new allegation is arriving at a time when we’re seeing several components of the antitrust lawsuit against the company take its public form after getting filed two months back.

Moreover, after that, we saw how the American regulator ended up revealing that the top tech giant was involved in this unlawful behavior and they had plenty of evidence in the form of excerpts that prove the actions taken.

This would now give the public a great view of the latest argument by the FTC regarding how Amazon is operating and how it continues to take great advantage of its powerful role in the tech world where so much goes unnoticed.

Meanwhile, the documents went on to allege further how the FTC also exposed a secretive project dubbed Nessie that spoke about Amazon’s hidden algorithm that it used between the years 2014 to 2019. The reason was simple. Amazon saw how so many other companies would take its pricing hiking strategy of products and match it up against their own.

So when the algorithm did get active, we would see a huge rise in pricing for such products and that’s when other kinds of stores would follow up. In this manner, the new higher prices would take center stage and when a buyer would compare with others in the industry, they would see how there was hardly any difference from rival firms and therefore would be left with no choice but to make the expensive purchase from top seller Amazon.

Moreover, the FTC alleged that Amazon saw this algorithm as its stepping stone to great success and as a smart way to mint money from buyers across the board. So you’d see the firm produce close to $1 billion in terms of added profit from the years 2016 to 2018.

But wait, it is not there as this method also ended up reaching a long list of consumer products including those designated as popular. So if for instance, you had a product that was viewed 400 million times, the price for that would be jacked up by the algorithm simultaneously to make the most profits.

Shockingly, Amazon was very cautious in its behavior and dealings and kept this a secret from the world because it did not wish to engage in the bucketloads of backlash taking place. And when it did see how concerning the ordeal was becoming over time, or people were getting worried about paying so much for certain products, it put the algorithm on hold or temporarily paused it.

After that particular scrutiny went down or was not talked about in detail, Amazon went back to its old mischievous tactics of using it again to raise prices for its long list of shoppers. So on average, the project Nessie algorithm was working round the clock and giving the company more than one reason to take clients for granted and put revenue as their leading top priority even if that was at the expense of others.

The FTC also added an element of shock by mentioning how Amazon was considering turning this unlawful means of making money on again between 2021 and 2022. The latter is the same period when we saw inflation taking a toll on the firm’s earnings without facing any hurdles while doing so.

Photo: DIW

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