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FTC blames Jeff Bezos for prioritizing ads on Amazon over search quality
https://www.whatjobs.com/news/amazon-news/ftc-blames-jeff-bezos-for-prioritizing-ads-on-amazon-over-search-quality
By Nithya Bose in Amazon News, posted November 4, 2023
Regulators have accused Amazon founder Jeff Bezos of instructing company executives to prioritize advertising revenue over search result accuracy.
The Federal Trade Commission recently revealed details from its antitrust lawsuit against the e-commerce giant.
The lawsuit, filed in September, alleges Amazon raises consumer prices by charging merchants fees to advertise on its digital marketplace.
Read More: FTC Sues Amazon Over Illegal Online Retail Monopoly
It claims Bezos instructed his executives to "accept more defects" in search results, even if it led to irrelevant ads.
The lawsuit claims it helped him to extract billions of dollars in increased advertising revenue.
Amazon denies these allegations, asserting they are taken out of context and don’t reflect the company's commitment to improving the customer experience.
The lawsuit also suggests that the company uses algorithms, like "Project Nessie".
It claims the company uses it to automate price matching with competitors, gaining market dominance unfairly.
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The FTC contends Project Nessie contributed to Amazon's excess profit of $1 billion.
An Amazon spokesman said FTC “grossly mischaracterizes” Nessie, which the company had stopped using several years ago.
He said: “Nessie was used to try to stop our price matching from resulting in unusual outcomes where prices became so low that they were unsustainable.
“The project ran for a few years on a subset of products, but didn’t work as intended.”
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The FTC says in its complaint that there are “no technical barriers to Amazon resurrecting — or even expanding — its use of Project Nessie.”
The agency said Amazon had considered using its “old friend Nessie” as recently as January 2022.
The lawsuit also sheds light on how Amazon allegedly controls its marketplace sellers to limit competition.
Amazon imposes strict standards on sellers, making it challenging for them to sell elsewhere.
The lawsuit also claims the firm discourages sellers from managing their shipping and logistics, even when they can deliver as fast as Amazon.
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FTC said: “Amazon’s CEO of Worldwide Operations wrote that he was ‘losing [his] mind’ after learning that UPS was advertising that its online retail fulfillment service could fulfill Prime-eligible orders.”
The allegations raised have implications for Amazon's business practices and their impact on competition, customer experience, and pricing.
The spokesperson said the allegations are misleading and sellers shipping independently were extremely slower than Amazon.
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