Do you ever get the nagging feeling that the price of an item on one website is likely going to be the same on another? Well, there’s a reason for that, and that reason is Amazon.
Jeff Bezos’ ecommerce giant is currently in the crosshairs of the US Federal Trade Commission which alleges the tech behemoth abused its market position and reaped profits by charging consumers more money. In fact, the US FTC went as far ahead as to file an actual lawsuit against the company in September, a redacted version of which is available publicly, but a recently discovered and reported on tidbit from The Wall Street Journal gives us insight into how exactly Amazon was manipulating prices — and it all had to do with an algorithm called Project Nessie.
Now, Project Nessie might sound like a cute name for what was essentially a code that adjusted prices across items on Amazon, but in reality, those adjustments were meant to help the company test the limits of how much it could raise prices before its competitors followed suit. In fact, so successful was the algorithm that it netted Amazon an additional $1 billion in revenue – how’s that for sweeeeet!
So here’s how it worked:
Given Amazon’s market lead, every time the code changed prices, the company’s competitors like Target or Walmart were prone to follow. Which meant if the price of an item was up on Amazon, it was up EVERYwhere. Of course, if the competitors didn’t bother following Amazon, Nessie would just revert the price back to what it used to be originally.
Oh, but it wasn’t just price increases. So advanced was the code, that when it noticed price drops elsewhere, say, during a sale, it would not only bring prices down on Amazon but keep them down long after a promotion ended, squeezing competitors out of the market.
Project Nessie is no longer in use, and nobody really knows why, but that hasn’t stopped the FTC from bringing Amazon to court. We’ll see how this plays out.
Amazon ranked #4 on HackerNoon’s Tech Company Rankings.
Amazon Ranking on HackerNoon’s Tech Company Rankings
Elon Musk vs. SEC (Again) 🙄
It’s only been a hot minute and the world’s richest man has decided to pick a fight yet again, this time with the U.S. Securities & Exchange Commission.
The U.S. regulator made headlines last week after it subpoenaed the Tesla/X/SpaceX/<enter company name here> CEO Elon Musk in hopes it could force one of the more divisive personalities on the internet to testify in a probe exploring his $44 billion takeover of social media titan Twitter, now rebranded as X.
Musk’s purchase of Twitter was a hot mess, beginning with him quietly building a stake in the company, then launching a hostile takeover, followed by a $44 billion offer and a failed attempt to renege on the acquisition. Of course, as we all know, the acquisition went through because Twitter forced the billionaire to complete it, essentially forcing Musk to pay more than what the company might have been worth.
But that’s all in the past. What concerns the SEC is the fact that it believes Musk broke federal securities laws in 2022 when he bought stock in the social media company, and despite repeated attempts to get a hold of the billionaire, it has been unable to do so.
This wouldn’t be the first time Musk has picked a fight with the SEC, having previously feuded with the securities regulator over a surprise 2018 tweet that he was taking Tesla private at $420 per share.
In Other News.. 📰
- Microsoft eyes closing its giant Activision Blizzard deal next week — via The Verge.
- Google to combine generative AI chatbot with virtual assistant — via Reuters.
- Amazon’s Alexa has been claiming the 2020 election was stolen — via The Washington Post.
- OpenAI said to be considering developing its own AI chips — via TechCrunch.
- Taiwan investigates firms that worked with Chinese companies reportedly supplying Huawei — via CNN.
- 23andMe investigating theft and leak of user data — via Axios.
- Sex, Signal messages and sabotage: SBF’s top execs and Bahamas roommates tell all in court — via CNBC.
And that’s a wrap! Don’t forget to share this newsletter with your family and friends! See y’all next week. PEACE! ☮️
— Sheharyar Khan, Editor, Business Tech @ HackerNoon
This article was originally published by Sheharyar Khan on Hackernoon.