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Report: Amazon made $1B with secret algorithm for spiking prices Internet-wide (arstechnica.com)

submitted 10 months ago by [email protected] to c/[email protected]

29 comments fedilink hide all child comments

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.

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[–] [email protected] 7 points 10 months ago (6 children)

But not only 50% of the additional profit - should be something like at least double or triple that.

[–] [email protected] 8 points 10 months ago (4 children)

It's 'The Formula' from Fight Club:

I was a recall coordinator. My job was to apply the formula.

A new car built by my company leaves somewhere travelling at 60 mph. The rear differential locks up. The car crashes and burns with everyone trapped inside. Now, should we initiate a recall?

Take the number of vehicles in the field, A. Multiply it by the probable rate of failure, B.
Multiply the result by the average out-of-court settlement, C.

A x B x C equals X. If X is less than the cost of a recall, we don't do one.

The key to preventing this kind of thing is to make sure that X is always considerably higher than A x B x C. If monetary penalties are all that are being assessed, they need to be fucking astronomical to the point that no reasonable company would even consider taking the risk of getting caught, no matter how minute that risk is. Until we start operating like that, there's simply no incentive for any of these companies to stop breaking the law.

[–] [email protected] 6 points 10 months ago (1 children)

And start throwing executives in jail.

[–] [email protected] 6 points 10 months ago

This is the real answer

If the penalty for a crime is only a fine, then that crime only exists for the lower class

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