Many companies, institutions and organizations use different policies to take part in the competitive environment in the market. Especially if you are an e-commerce marketplace, special algorithms etc. are required in addition to policies. You also need programs. However, some secret algorithms may undermine the rules of competition. Amazon is also on the agenda with this kind of incident. Allegedly, he made a profit of $1 billion with this algorithm. Here are the details…
Amazon’s secret algorithm brought him $1 billion in profit!
E-commerce sites and marketplaces compete with many different competing sites, large or small, at the same time. However, price policies implemented in an ever-evolving competitive environment are also important. However, sometimes you want to measure your competitors’ response by making price updates. In this way, you can make the most appropriate pricing for yourself and aim for the highest profit.
Allegedly, Amazon also has this type of algorithm. However, this algorithm it has is against the Federal Trade Commission’s antitrust law. In line with this law, you have to sell in accordance with certain competition rules. Otherwise, the Federal Trade Commission will fine you a large amount.
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The Federal Trade Commission sued the e-commerce giant, alleging that Amazon used a secret algorithm that allowed unfair competition. Accordingly, Amazon was making other retailers, such as Target, change their prices with its algorithm. With the algorithm called Project Nessie, Amazon was increasing the prices of products in a certain group. He was then waiting for price changes from other e-commerce sites and suppliers.
The algorithm was ready for different scenarios according to the new pricing of the suppliers. Thanks to this algorithm, Amazon determined the market prices itself. This brought the company an additional profit of around 1 billion dollars. In its statement, Amazon states that it used this algorithm until 2019 and then removed the algorithm from the site. But the Federal Trade Commission insists this is not the case.
The decision on the issue will be announced in the coming days. So what do you think? Don’t forget to share your opinions with us in the comments section and subscribe to ShiftDelete.Net YouTube channel!