That Time the FTC Sued Amazon For $1B Profit, Price Manipulation

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That Time the FTC Sued Amazon For $1B Profit, Price Manipulation

FTC SUES AMAZON OVER $1B IN PROFITEERING WITH PRICE MANIPULATION ALGORITHM

It’s been years, and has taken me no little time to remember the details.  But about 20 years ago or thereabouts, a friend heard that I was in the market for a new TV and gave me some advice.  To make matters even more dated, I didn’t even want a new TV, I wanted my first real flat screen TV, in letterbox format.  She had (at the time) recently gotten her own, a Sony of some make.  So after getting her advice, I went to do the same, and followed her direction.  I’ll flesh that out below.  But it those details create the context for how the FTC is now suing Amazon for using monopolistic practice to make an extra $1B in profit by using price manipulation.

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YEARS AGO, YOU COULD TRIUCK AMAZON INTO GIVING YOU A COMPETITIVE PRICE.  NOW?  PRICE MANIPULATION

So all those years ago, my friend instructed me to search for a range of TV models on Google.  But I had to clear my cache and cookies first in the browser, then I could find the competitive (or then best current) price on Amazon.  I took her advice, though I did first search within Amazon first to see the difference.  As I remember, the difference was roughly $300!  But boy have times changed from when Amazon would only give you a good (or best) price if you made them compete in the “search” marketplace.  Now?  Now, Amazon uses a “secret algorithm” that only serves to spike prices ever higher.

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AMAZON USED AN ALGORITHM TO MAKE SURE NO ONE EVER LOWERED THEIR PRICES TO COMPETE

In oversimplified summary, this means that Amazon intentionally taught its competitors that lower prices don’t increase sales.  So then everyone kept their prices higher, regardless of the supposed supposed supply/demand relationship.  And that there is how monopolies (and oligopolies in coordination) control markets to profiteer.  Until someone like the FTC stops them, of course.  And that is clearly what it will take, the FTC suing Amazon for manipulating prices to make consumers pay more no matter where they buy.

But especially Amazon.  For more detail, you can read here at Arstechnica.

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