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“Project Nessie” — Report: Amazon made $1B with secret algorithm for spiking prices Internet-wide Report reveals details about Amazon’s secret algorithm redacted in FTC complaint.

Ashley Belanger – Oct 4, 2023 8:50 pm UTC EnlargeBloomberg / Contributor | Bloomberg reader comments 74 with

Last week, the Federal Trade Commission sued Amazon, alleging that the online retailer was illegally maintaining a monopoly. Much of the FTC’s complaint against Amazon was redacted, but The Wall Street Journal yesterday revealed key details obscured in the complaint regarding a secret algorithm. The FTC alleged that Amazon once used the algorithm to raise prices across the most popular online shopping destinations.

People familiar with the FTC’s allegations in the complaint told the Journal that it all started when Amazon developed an algorithm code-named “Project Nessie.” It allegedly works by manipulating rivals’ weaker pricing algorithms and locking competitors into higher prices. The controversial algorithm was allegedly used for years and helped Amazon to “improve its profits on items across shopping categories” and “led competitors to raise their prices and charge customers more,” the WSJ reported.

The FTC’s complaint said:

Amazon uses its extensive surveillance network to block price competition by detecting and deterring discounting, artificially inflating prices on and off Amazon, and depriving rivals of the ability to gain scale by offering lower prices.

The FTC complaint redacted this information, but sources told the WSJ that Amazon made “more than $1 billion in revenue” by using Project Nessie, while competitors learned that “price cuts do not result in greater market share or scale, only lower margins,” the FTC’s complaint said.

“As a result, Amazon has successfully taught its rivals that lower prices are unlikely to result in increased salesthe opposite of what should happen in a well-functioning market,” the FTC alleged.

Amazon stopped using the algorithm in 2019for no clear reason, sources told the WSJ.

FTC spokesman Douglas Farrar told the WSJ that the agency wants more public access to redacted information in the complaint and continues to “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. Advertisement

Amazon’s spokesperson Tim Doyle told Ars that the FTCs allegations grossly mischaracterize this tool.”

“‘Project Nessie’ was a project with a simple purposeto try to stop our price matching from resulting in unusual outcomes where prices became so low that they were unsustainable,” Doyle said. “The project ran for a few years on a subset of products, but didnt work as intended, so we scrapped it several years ago.

In a blog responding to the FTC’s lawsuit, David ZapolskyAmazon’s senior vice president of global public policy and general counselwrote that the FTC fundamentally misunderstands how retail markets work. Zapolsky said that “matching low prices offered by other retailers” has not “somehow” led “to higher prices.”

“Thats not how competition works,” Zapolsky wrote. “The FTC has it backwards and if they were successful in this lawsuit, the result would be anticompetitive and anti-consumer because wed have to stop many of the things we do to offer and highlight low pricesa perverse result that would be directly opposed to the goals of antitrust law.

According to the FTC’s complaint, “Amazon recognizes the importance of maintaining the perception that it has lower prices than competitors,” but that Amazon designed Project Nessie specifically “to deter other online stores from offering lower prices than those of Amazon.”

In a press release, the FTC confirmed that it intends to prove that Amazon is “stifling competition on price,” among other alleged consumer harms.

“Amazons far-reaching schemes impact hundreds of billions of dollars in retail sales every year, touch hundreds of thousands of products sold by businesses big and small, and affect over a hundred million shoppers,” the FTC’s press release said.

“Seldom in the history of US antitrust law has one case had the potential to do so much good for so many people,” John Newman, the deputy director of the FTCs Bureau of Competition, said. Page: 1 2 Next → reader comments 74 with Ashley Belanger Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience. Advertisement Channel Ars Technica ← Previous story Next story → Related Stories Today on Ars

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More than 1,200 confirmed dead and 800 missing in catastrophic Asia floods

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More than 1,200 confirmed dead and 800 missing in catastrophic Asia floods

Rescue and recovery and efforts are under way in parts of South and Southeast Asia where the number of those killed in devastating floods continues to rise.

Cyclones and extreme weather have killed at least 1,200 people in Sri Lanka, Indonesia and Thailand, according to authorities.

Rescuers are still searching for hundreds of missing people after a cyclone and other storms triggered flooding and landslides in the region.

In a post on X, the King and Queen Camilla said they were “deeply saddened” to hear about devastating storms and added their “heartfelt condolences” to the families of those who have died.

Landslides in Sarasavigama village near Kandy, Sri Lanka. Pic: AP
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Landslides in Sarasavigama village near Kandy, Sri Lanka. Pic: AP

A man wades through the flooded street, following heavy rainfall in Wellampitiya, Sri Lanka. Pic: Reuters
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A man wades through the flooded street, following heavy rainfall in Wellampitiya, Sri Lanka. Pic: Reuters

A man uses a makeshift raft at a flooded area, following Cyclone Ditwah in Kelaniya, Sri Lanka. Pic: Reuters
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A man uses a makeshift raft at a flooded area, following Cyclone Ditwah in Kelaniya, Sri Lanka. Pic: Reuters

Hundreds of thousands in shelters in Sri Lanka

Sri Lankan authorities said about 218,000 people were in temporary shelters after downpours that triggered landslides, primarily in the tea-growing central hill country.

People were seen salvaging belongings from flooded homes along the banks of the Kelani River, near the capital Colombo on Monday.

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Meanwhile, train and flight services have resumed after being disrupted last week, but schools stayed closed, officials said.

Cyclone Ditwah was the “largest and most challenging” natural disaster in Sri Lanka’s history, President Anura Kumara Dissanayake said.

A landslide survivor crosses a section of a damaged road in Sarasavigama village near Kandy, Sri Lanka. Pic: AP
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A landslide survivor crosses a section of a damaged road in Sarasavigama village near Kandy, Sri Lanka. Pic: AP

Landslide survivors salvage belongings at the site of a landslide in Sarasavigama village near Kandy, Sri Lanka. Pic: AP
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Landslide survivors salvage belongings at the site of a landslide in Sarasavigama village near Kandy, Sri Lanka. Pic: AP

A man uses his scarf to protect himself from the rain in the aftermath of Cyclone Ditwah, in Chennai, India. Pic: Reuters
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A man uses his scarf to protect himself from the rain in the aftermath of Cyclone Ditwah, in Chennai, India. Pic: Reuters

The cyclone also brought heavy rain to India’s southern state of Tamil Nadu over the weekend, with authorities saying three people were killed in rain-related incidents.

The storm, which as of 5pm UK time on Monday was about 20km (12 miles) off the coast of the state capital Chennai, has weakened into a “deep depression” and was expected to weaken further in the next few hours, weather officials said.

Amount of rainfall expected in South and Southeast Asia in the next 48 hours
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Amount of rainfall expected in South and Southeast Asia in the next 48 hours

Over a million affected in Indonesia

More than 28,000 homes have been damaged in Indonesia, with 1.4 million people affected by torrential rains following a tropical storm that formed in the Malacca Strait.

The country’s president, Prabowo Subianto, called it a catastrophe and pledged to rebuild infrastructure as he visited the three affected provinces on Monday, where nearly 300,000 people have been displaced by the flooding.

Rescuers search for flood victims in Tanah Datar, West Sumatra, Indonesia. Pic: AP
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Rescuers search for flood victims in Tanah Datar, West Sumatra, Indonesia. Pic: AP

A flooded field in Indonesia's West Sumatra province. Pic: Reuters
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A flooded field in Indonesia’s West Sumatra province. Pic: Reuters

Rescuers search for victims at a village affected by flash flooding, in Agam, West Sumatra, Indonesia. Pic: AP
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Rescuers search for victims at a village affected by flash flooding, in Agam, West Sumatra, Indonesia. Pic: AP

‘Nothing remains’

“The water just rose up into the house and we were afraid, so we fled. Then we came back on Friday, and the house was gone, destroyed,” said Afrianti, 41, who only goes by one name and lives in West Sumatra’s Padang city.

She and her family of nine have made their own tent shelter beside the single wall that remains of their home.

“My home and business are gone, the shop is gone. Nothing remains. I can only live near this one remaining wall,” she said.

Highest one-day rainfall in Thai city for 300 years

In Thailand, flooding in eight southern provinces affected about three million people and led to a major mobilisation of its military to evacuate critical patients from hospitals and reach people stuck in floodwaters for days.

In the worst-affected city of Hat Yai, a southern trading hub, 335mm (13 inches) of rain fell on 21 November, its highest single-day tally in 300 years, followed by days of unrelenting downpours.

More than three million people have been impacted by floods in Thailand
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More than three million people have been impacted by floods in Thailand

People move a car damaged by floods in Songkhla province, southern Thailand. Pic: AP
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People move a car damaged by floods in Songkhla province, southern Thailand. Pic: AP

King offers ‘heartfelt condolences’

King Charles and Queen Camilla responded to the crisis in a statement posted on X and praised the work of emergency responders: “We wish to express our heartfelt condolences to the families of those who have so tragically lost their lives.

“Our thoughts and prayers are with the many whose homes have been destroyed and to all who are awaiting news of loved ones missing.

“These disasters remind us of the increasingly urgent need to restore the balance and harmony of Nature.”

Thailand’s Prime Minister Anutin Charnivirakul expects residents to be able to return home within seven days, a government spokesperson said on Monday.

Read more from Sky News:
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The first batch of compensation payments was set to be distributed on Monday, starting with 239m baht (£5.6m) for 26,000 people, the spokesperson added.

In Malaysia there have been at least three deaths and authorities are still on alert for a second and third wave of flooding as 11,600 remain in evacuation centres.

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Maduro says Venezuela ready to defend itself as US considers potential land attack

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Maduro says Venezuela ready to defend itself as US considers potential land attack

Nicolas Maduro has said Venezuelans are ready to defend their country as the US considers a land attack.

The president held a rally in Caracas amid heightened tensions with Donald Trump’s administration, which has been targeting what it says are boats carrying drug smugglers.

Mr Trump met his national security team on Monday evening, having warned last week that land strikes would start “very soon”.

An image of an alleged drug boat being targeted by the US military. Pic: Truth Social
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An image of an alleged drug boat being targeted by the US military. Pic: Truth Social

It’s not been confirmed what was discussed at the meeting, but White House press secretary Karoline Leavitt told reporters: “There’s many options at the president’s disposal that are on the table – and I’ll let him speak on those.”

US forces have carried out at least 21 strikes on boats it claims were carrying narcotics to its shores over the last few months, and the White House has accused Mr Maduro of being involved in the drugs trade – a claim he denies.

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‘The president has a right to take them out’

‘Psychological terrorism’

Mr Maduro – widely considered a dictator by the West – said on Monday that Venezuelans are ready “to defend [the country] and lead it to the path of peace”.

More on Nicolas Maduro

“We have lived through 22 weeks of aggression that can only be described as psychological terrorism,” he said.

Venezuela has said the boat attacks, which have killed more than 80 people, amount to murder – and that Mr Trump’s true motivation is to oust Mr Maduro and access its oil.

Concerns have been raised over the legality of the US attacks, which the Pentagon has sought to justify by designating the gangs as foreign terror organisations.

Maduro was championed by supporters as he spoke on Monday. Pics: Reuters
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Maduro was championed by supporters as he spoke on Monday. Pics: Reuters

Controversy over US strikes

Tensions remain high over America’s large deployment in the Caribbean Sea and eastern Pacific, which includes its flagship aircraft carrier and thousands of troops.

The US has released videos of boats being blown up but has not provided evidence – such as photos of drugs – to support the smuggling claims.

Controversy also surrounds the first incident, on 2 September, in which 11 people were killed – with a follow-up strike targeting the boat after the first attack left two survivors in the water.

US media reported defence secretary Pete Hegseth gave an order that everyone on board should be killed.

However, there are concerns about the legality of the second strike if the survivors posed no threat.

Mr Hegseth dismissed the reporting as “fake news” and insisted all actions in the region are compliant with US and international law.

“Every trafficker we kill is affiliated with a Designated Terrorist Organization,” he said on X.

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Is US about to go to war with Venezuela?

Mr Trump said on Sunday he would not have wanted a second strike and that Mr Hegseth had denied giving such an order.

Ms Leavitt confirmed on Monday that the boat had been hit by a second strike – but denied Mr Hegseth gave the order for the follow-up.

Instead, she said he had authorised US navy vice admiral Frank Bradley to attack, and the admiral acted “well within his authority and the law, directing the engagement to ensure the boat was destroyed and the threat to the US was eliminated”.

Read more from Sky News:
Hong Kong fire: 13 arrested as death toll hits 151
More than 1,100 confirmed dead in Asia floods

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Trump: Maduro call neither ‘went well or badly’

As the US weighs its next steps, Mr Trump said on Sunday he had spoken to Mr Maduro by phone and that the conversation went neither “well or badly”.

In recent days, he also stated that Venezuela’s airspace should be considered closed – with the South American nation calling it a “colonial threat” and “illegal, and unjustified aggression”.

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PM issues China warning – and hits out at Brexit

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PM issues China warning - and hits out at Brexit

Sir Keir Starmer has warned China poses “real national security threats to the United Kingdom” – and hit out at Brexit.

During a speech at the Guildhall in London, the prime minister said “wild promises” made to the British people ahead of the referendum have been unfulfilled.

“How it was sold and delivered was simply wrong,” he added. “We are still dealing with the consequences today.”

The Guildhall event is a flagship foreign policy speech for any PM. Pic: Reuters
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The Guildhall event is a flagship foreign policy speech for any PM. Pic: Reuters

Sir Keir argued it would be “utterly reckless” to consider Brexit as a template for future foreign policy – and attacked politicians who have a “corrosive, inward-looking attitude”.

He singled out Kemi Badenoch and Nigel Farage, who have both called for the UK to leave the European Convention on Human Rights – and Zack Polanski, who wants to leave NATO.

Such attitudes “offer grievance rather than hope”, the PM said – accusing them of having “a declinist vision of a lesser Britain, not a Great Britain”.

Although Sir Keir opposed Brexit when in Opposition, he stressed that the vote to leave “was a fair, democratic expression, and I will always respect that”.

He told the Lady Mayor’s Banquet that Labour has made “a decisive move to face outward again and build our power, both hard and soft, which had been so damaged and neglected”.

The Lady Mayor's Banquet took place on Monday night. Pic: Reuters
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The Lady Mayor’s Banquet took place on Monday night. Pic: Reuters

‘Protecting our security is non-negotiable’

Elsewhere in the speech, the prime minister warned the UK needs a policy towards China that recognises the national security threat it poses.

He said: “For years we have blown hot and cold. We had the ‘Golden Age’, which then flipped to an ‘Ice Age’. We reject that binary choice.

“So our response will not be driven by fear, nor softened by illusion. It will be grounded in strength, clarity and sober realism.”

China has been a major issue in Westminster of late following accusations of spying in parliament, and controversy over the new “super embassy” that Beijing wants to build in central London.

Analysis: Not everyone will like what PM had to say


John Craig

Jon Craig

Chief political correspondent

@joncraig

The China hawks like Iain Duncan Smith, Tom Tugendhat and others on the Conservative benches – and indeed Reform – won’t like this one little bit.

A large part of this speech was devoted to China, and he did talk about the twin-track approach: being tough on national security, but at the same time talking to the Chinese.

He bemoaned the fact that a British prime minister hadn’t talked to the Chinese premier since Theresa May in February 2018.

This was probably the most wide-ranging, perhaps most significant foreign policy speech we’ve heard from Sir Keir Starmer.

It comes against the backdrop of all the political turmoil over the budget, but it was a serious speech. It will please those who want to see the UK taking a much more interventionist approach rather than isolationist.

His supporters will like what they’ve heard here – but not China hawks and Brexiteers.

However, Sir Keir defended plans to visit China in the new year – and said an absence of engagement with the world’s second-biggest economy would be “staggering” and a “dereliction of duty”.

He described it as “a nation of immense scale, ambition, and ingenuity” and a “defining force in technology, trade and global governance”.

‘Huge’ opportunities for businesses

Setting out his own approach, Sir Keir explained: “This is not a question of balancing economic and security considerations. We don’t trade off security in one area, for a bit more economic access somewhere else.

“Protecting our security is non-negotiable – our first duty. But by taking tough steps to keep us secure, we enable ourselves to cooperate in other areas.”

The PM added that he wants to give businesses “the confidence, clarity, and support” to win opportunities in China.

“In areas like financial and professional services, creative industries, pharmaceuticals, luxury goods and more – Great British success stories – the export opportunities are huge, and we will back you to seize them,” he said.

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PM preparing for likely China visit

‘Starmer continues to kowtow to China’

Sky News understands the prime minister is set to approve plans for a controversial Chinese “super embassy” in central London.

A final decision on the planning application for the former Royal Mint site near the Tower of London is due on 10 December after repeated delays.

Concerns were previously raised after Beijing’s planning application featured blacked-out areas.

Since he was elected last year, Sir Keir has been active on the world stage, trumpeting deals with the US, India, and the EU and leading the “coalition of the willing” in support of Ukraine.

But he has also faced criticism from his opponents, who accuse him of spending too much time out of the UK attending international summits rather than focusing on domestic issues.

Read more:
MI5 spying warning aims to send signal to China
‘Many options’ on table for Venezuela

The Tories branded Starmer 'Beijing's useful idiot'. Pic: Reuters
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The Tories branded Starmer ‘Beijing’s useful idiot’. Pic: Reuters

Responding to the prime minister’s speech, shadow foreign secretary Dame Priti Patel said: “From China’s continued flouting of economic rules to transnational repression of Hong Kongers in Britain, Starmer’s ‘reset’ with Beijing is a naive one-way street, which puts Britain at risk while Beijing gets everything it wants.

“Starmer continues to kowtow to China and is captivated by half-baked promises of trade.

“Coming just days after the latest Chinese plot to interfere in our democracy was exposed, his love letter to the Chinese Communist Party is a desperate ploy to generate economic growth following his budget of lies and is completely ill-judged.

“While China poses a clear threat to Britain, China continues to back Iran and Russia, and plots to undermine our institutions. Keir Starmer has become Beijing’s useful idiot in Britain.”

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