The U.S. Federal Trade Commission (FTC) and a coalition of 17 state attorneys general have intensified their antitrust battle against Amazon, unveiling new allegations that the company deployed a secret pricing algorithm, codenamed “Project Nessie,” to illegally inflate prices and extract over $1 billion from American consumers.
According to a newly unredacted court filing in the federal lawsuit, Amazon used Project Nessie to test how much it could raise prices in a way that competitors would follow suit. The algorithm would increase the price of certain products and monitor whether other retailers, like Target or Walmart, matched the higher price. If competitors did not follow, the algorithm would automatically revert the price to its original level. However, if they did, Nessie would keep the price artificially high, a practice the FTC alleges is a form of illegal price manipulation that stifles competition.
The complaint claims that Amazon was fully aware of the algorithm’s power and its impact on the market. While Amazon reportedly paused the use of Project Nessie in 2019, the FTC notes that the company could reactivate it at any time. The agency argues this tool is a clear example of Amazon’s monopoly power being used to the detriment of both consumers, who pay more, and sellers on its platform, who are subject to its pricing power.
In a statement, an Amazon spokesperson called the FTC’s characterization of the tool “grossly misleading,” stating that Project Nessie had a simple purpose to try to stop its prices from being artificially low and that it was discontinued years ago. This new revelation moves the landmark antitrust case from theoretical arguments about market dominance to specific allegations of a tool designed to directly manipulate prices, significantly raising the stakes in the U.S. government’s broader crackdown on Big Tech.
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