12 mo. ago • 97%

Amazon reportedly used a secret algorithm to jack up prices

www.theverge.com Amazon reportedly used a secret algorithm to jack up prices

The FTC’s public antitrust complaint redacted its Project Nessie section.

52 comments

Hasn't the travel, cruise and holiday industry been doing this for decades now?

60
- Most companies that sell products do this in some form. The only thing that's secret about it is the particular process and code, since that's confidential company info.
  
  A few years ago I remember speaking with a Walmart GM about this sort of thing, and they mentioned how their site in their region would receive price updates after their volume, revenue, staffing, supply chain logistics to their site, etc., were analyzed. Admittedly, I don't know if they had real analysts or machine learning, or a mix of the two (likely both, since it was 5 or 6 years ago).
  
  A key point to this is that most businesses selling things buy most of their products from suppliers, who have their own pricing mechanisms - which causes downstream businesses to adjust accordingly.
  
  29
  
  We'll see it down to the minute in B&M storefronts soon as well. The local Superstore and Walmart already have digital price tags on shelves. Milk could go up $0.50/L between the time you grab it off the shelf and then finish shopping to hit the checkout.
  
  A bunch of people buying cookies? Oh, better raise that price by $1.50/box
  
  3
It's generally not illegal to raise your prices or set your prices at what your competitors are charging. There are variety of factors that influence a price of an item.

The issue is that the FTC is alleging that the algorithm artificially boosted prices and keeping the prices that high when competitors matched the price.

While it's not outright collusion on price fixing, it does reek of using monopolistic practices to fatten the bottom line.

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- I really can't believe its legal to charge more or less based on a customers location, or probably other data about us. This seems like such a fucking problem.
  
  9
  
  Really, it's super legal. If you buy a textbook in America or you buy the same textbook in India, the price difference can be 90%, and I recall the publishers legally going after people for having the gall of buying the cheaper textbooks.
  
  3
- And yet, no one says anything when landlords use the same basic tools to price fix rents.
  
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- I am also certain that any retailers competing with Amazon -- at least those of sufficient size -- have their own data scientists banging away on optimizing pricing too.
  
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According to the Journal, Nessie would inflate prices and monitor whether other retailers, like Target, would follow suit. If the competing retailers maintained the lower price, the algorithm would automatically revert Amazon’s to its normal price.

Isn’t this how retail pricing always works?

33
- That basically sounds like automated price fixing
  
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  Price fixing is when sellers conspire to increase prices beyond what normal competition would support. The fact that the algorithm reduces the price below competitors’ when it detects they are not following a corresponding increase means it’s not price fixing.
  
  4
  
  I don't think you understand what price fixing is. Adjusting prices to market competition is not price fixing. This same concept can also lower prices if another vendor is selling the same item for less.
  
  For instance, Amazon frequently will lower prices to match chewy and Walmart
  
  0
- Only issue is the automated fashion in which it’s done. It means they can easily push prices up and up and up to extract every last penny they can from buyers.
  
  Greed is no longer something that you have to work at, if you have a desire to fuck people over you’re just a button away from doing it.
  
  7
- At the scale of Amazon, it's much less reasonable.
  
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- Most people don't know how retail pricing works, so when they read an article like this, they're shocked and offended
  
  0
Meanwhile secret algorithm: price *= 1.1

29
Of course... That's their whole business model

9
- It's literally anyone's business model in a capitalistic market, it's hilarious that people are shocked and offended
  
  0
Ive bought through amazon three times in my life. Each time i regretted my purchase because the absolute lowest quality shit arrived. Why the fuck would anyone buy anything from there?

6
- Because you bought from shit sellers, amazon is just the marketplace
  
  16
  
  amazon basics entered the chat
  
  Amazon is also the only marketplace where ive seen products from such recognizable companies as ghutxcl
  
  21
- For me, it's simply that there's stuff I can't find without driving 4h to another city, and even then only maybe.
  
  10
  
  Another city hasn't discovered post services yet?
  
  1
  
  Is Amazon really your only internet retailer, or have you just not bothered looking for other online alternatives?
  
  0
- Because you have like 3 weeks to decide you want to keep that purchase or not for a full refund
  
  8
  
  Oh yes, i forgot how well amaozn treats its drivers and that the cars produce no emissions so we can just test buy everything
  
  -10
- If the items were shit, why didn’t you return them?
  
  6
- Because it's convenient when I often can't get out, it has a good return policy, and your experience is radically different from my own. Mainly that last bit.
  
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- It used to be decent, but in recent years it's basically become wish.com with better logistics.
  
  4
Is this really a surprise?

6
- I'm shocked, I tell you, SHOCKED!
  
  4
Secret or standard?

6
Is it the scale of sales that matters? Like if I make an Etsy shop and set my prices based on competitors, is that illegal?

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- No, you're doing capitalism just like Amazon and everyone else. And if you don't want to do it personally feel free to write a script to do it just like Amazon
  
  1
the secret is the capitalism they used along the way

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Verge is back publishing bullshit.. like in good old times. "Secret algorithm". So prices have been raised and? No one told us... yeah... wow.. is it unusual? They used a tool to do that and it was secret. And wallmart publishes their IT on Github? Prices usually grow, if they can't or goods sell bad, they need to reduce them again. That's how market works.

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An items worth is what someone is willing to pay. It's kind of the whole point of capitalism. If you don't like it, don't buy it.

-4
This just in: technology company uses technology to run their company. Shocking!

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