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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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Sabrina Carpenter hits out at ‘evil and disgusting’ White House video featuring her song

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Sabrina Carpenter hits out at 'evil and disgusting' White House video featuring her song

Sabrina Carpenter has hit out at an “evil and disgusting” White House video of migrants being detained that uses one of her songs.

“Do not ever involve me or my music to benefit your inhumane agenda,” the pop star posted on X.

The White House used part of Carpenter‘s upbeat song Juno over pictures of immigration agents handcuffing, chasing and detaining people.

It was posted on social media on Monday and has been viewed 1.2 million times so far.

President Trump‘s policy of sending officers into communities to forcibly round up illegal immigrants has proved controversial, with protests and legal challenges ongoing.

Mr Trump promised the biggest deportation in US history, but some of those detained have been living and working in the US for decades and have no criminal record.

Carpenter is not the only star to express disgust over the administration’s use of their music.

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Olivia Rodrigo last month warned the White House not to “ever use my songs to promote your racist, hateful propaganda” after All-American Bitch was used in a video urging undocumented migrants to leave voluntarily.

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In July, English singer Jess Glynne also said she felt “sick” when her song from the viral Jet2 advert was used over footage of people in handcuffs being loaded on a plane.

Other artists have also previously hit out at Trump officials for using their music at political campaign events, including Guns N’ Roses, Foo Fighters, Celine Dion, Ozzy Osbourne and The Rolling Stones.

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Thames Water debt pile rises further despite return to profit

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Thames Water debt pile rises further despite return to profit

Cash-strapped Thames Water has revealed a further rise in its debt pile while recording a return to profit on the back of inflation-busting hikes to bills.

The UK’s largest supplier said the 31% rise to customer bills since April had allowed it to increase capital investment by 22% to £1.3bn amid demands it improve performance in preventing sewage spills and stopping leaks.

Thames Water said it recorded a 20% drop in pollution incidents over the six months to the end of September, and leakage performance was holding steady despite the “extremely dry summer”.

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While waste complaints dipped by 11%, according to the company, there was a 42% surge in the number of customers complaining about the hike to bills.

Thames Water revenue rose 42% on the same period last year to £1.9bn, helping a return to profit after tax of £328m on the back of a £190m loss during April-September 2024.

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The company said profitability was damaged by higher debt serving costs.

Its debt pile was recorded at £17.6bn – a rise of 5%.

The results were released against the backdrop of continuing talks involving the government and regulators over a proposed rescue deal by major Thames Water creditors.

Their consortium is known as London & Valley Water.

It effectively already owns Thames Water under the terms of a financial restructuring agreed early in the summer but regulator Ofwat is yet to give its verdict on whether the consortium can run the company, averting the prospect of it being placed in a special administration regime.

Without a deal the consortium, which includes investment heavyweights Elliott Management and BlackRock, would be wiped out.

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August: Is Thames Water a step closer to nationalisation?

Ofwat, which is to be scrapped under a shake-up of industry oversight, has been leading scrutiny of London & Valley’s operational plan and proposed capital structure.

The prospective deal would write off billions of pounds of the company’s debt and inject billions in fresh equity, in return for an adjustment in the regulator’s approach to future financial penalties.

Thames sees the creditors’ proposal as the only viable solution.

Despite huge hikes to household bills – allowed across England and Wales to bolster aging infrastructure including storm overflows – the company says its financial turnaround has been hampered by record fines for things like sewage leaks and bonuses to retain key staff.

Sky News revealed on Tuesday that its remuneration committee will meet next week to decide whether to proceed with nearly £2.5m in retention payments to 21 senior managers.

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Thames Water chief executive Chris Weston said the company had made good progress on its operational and transformation targets.

“This progress has all been achieved as we also manage the recapitalisation of the business. We continue to work closely with stakeholders to secure a market-led solution that we believe is in the best interests of our customers and the environment.

“This in turn will allow the transformation of Thames to continue, a programme that will take at least a decade to complete and will restore the infrastructure and operations of the company.”

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FIFA backs away from dynamic pricing for all World Cup 2026 tickets

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FIFA backs away from dynamic pricing for all World Cup 2026 tickets

FIFA has backed away from using dynamic pricing for all 2026 World Cup tickets amid concerns about the cost of attending the tournament in North America.

The organisers insisted they always planned to ring-fence tickets at set prices to follow your own team.

But the announcement comes just days ahead of Friday’s tournament draw in Washington DC, which Donald Trump plans to attend.

Fans will have to wait until Saturday to know exactly where and when their teams will be playing in next summer’s tournament.

Scotland will be one of the teams in the tournament, held in North America and Mexico
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Scotland will be one of the teams in the tournament, held in North America and Mexico

Variable pricing – fluctuating based on demand – has never been used at a World Cup before, raising concerns about affordability.

England and Scotland fans have been sharing images in recent days of ticket website images highlighting cost worries.

But world football’s governing body said in a statement to Sky News: “FIFA can confirm ringfenced allocations are being set aside for specific fan categories, as has been the case at previous FIFA World Cups. These allocations will be set at a fixed price for the duration of the next ticket sales phase.

“The ringfenced allocations include tickets reserved for supporters of the Participating Member Associations (PMAs), who will be allocated 8% of the tickets for each match in which they take part, including all conditional knockout stage matches.”

FIFA says the cheapest tickets are from $60 (£45) in the group stage. But the most expensive tickets for the final are $6,730 (£5,094).

There will also be a sales window after the draw from 11 December to 13 January when ticket applications will be based on a fixed price for those buying in the random selection draw.

It is the biggest World Cup with 104 matches after the event was expanded from 32 to 48 teams. There are also three host nations for the first time – with Canada and Mexico the junior partners.

The tournament mascots as seen in Mexico in October. Pic: Reuters
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The tournament mascots as seen in Mexico in October. Pic: Reuters

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FIFA defended using fluctuating pricing.

“The pricing model adopted for FIFA World Cup 26 reflects the existing market practice for major entertainment and sporting events within our hosts on a daily basis, soccer included,” FIFA’s statement continued.

“This is also a reflection of the treatment of the secondary market for tickets, which has a distinct legal treatment than in many other parts of the world. We are focused on ensuring fair access to our game for existing but also prospective fans.”

The statement addressed the concerns being raised about fans being priced out of attending.

FIFA said: “Stadium category maps do not reflect the number of tickets available in a given category but rather present default seating locations.

“FIFA resale fees are aligned with North American industry trends across various sports and entertainment sectors.”

Ireland, Northern Ireland and Wales could also still qualify.

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