Amazon faces allegations of using a secret algorithm to raise prices significantly for U.S. consumers, with reports of sharp price hikes both online and in physical stores, impacting products from groceries to streaming services, potentially leading to regulatory action and stock declines amid a tough year for the e-commerce giant.
Are you ready for some shocking breaking news? The Wall Street Journal and Reuters just exposed that e-commerce giant Amazon is being accused by regulators of using a secret algorithm to price gouge U.S. consumers in 2023. Have you noticed that the services and products the company sells are getting significantly more expensive right now? At physical stores, shoppers are seeing huge price hikes taking place almost overnight. The situation isn’t any better on online platforms, with Amazon streaming services facing the second round of price increases in less than 10 months.
At brick-and-mortar stores, especially in the grocery segment, consumers are reporting massive price hikes happening seemingly overnight. On Reddit, several complaints reveal that the price of food staples is shooting up by more than 100% at Amazon Fresh stores. “Has anyone noticed that there has been a sharp price hike in the prices of Amazon Fresh in Capitol Hill?” one user asked, saying that the cost of a single banana went from 15 cents to 35 cents. “That’s over 100% increase,” the person stressed. “I recall going there about two weeks ago and the prices were still like before, so this change seems to have happened overnight.”
Even more alarmingly, Americans are noticing that prices at the online app are spiking after they add items to their online shopping cart. A quick search of forums and social media turns up countless accounts of Amazon price hikes after browsing. Amazon is raising prices on people’s shopping carts by up to 40%, and new reports reveal the retailer is using a secret algorithm to test how much it can increase costs on the consumer before they give up on the purchase or buy the products at other retail rivals.
The existence of the algorithm, codenamed Project Nessie, was first revealed in September in a complaint filed by the Federal Trade Commission (FTC) accusing Amazon of violating U.S. antitrust law. However, only yesterday details on how the algorithm operated were released. According to regulators, Nessie would inflate prices and monitor whether other retailers, like Target, would do the same. In case retail rivals maintained the lower price, the algorithm would automatically revert Amazon’s to its normal price. The FTC exposed that Nessie helped the company to vastly increase its profits by artificially increasing its prices across different shopping categories.
Retail experts say the lawsuit can break up the company, ending a decades-long empire as the court is likely to force the online retailer to sell its assets. Right now, Amazon stocks are taking a beating. Since Tuesday, shares have been dropping after the rumors began to spread. But things have taken a dramatic turn for the worst when Reuters – in an exclusive report – warned that international regulators are also launching an antimonopoly investigation into the company’s dominance of the cloud computing marketplace.
The past 12 months have been particularly hard for Amazon. Shares of the e-retailer had their worst year since the dot-com crash. The stock has tumbled 51% last year, marking the biggest decline since 2000, when it plunged 80%. Right now, it is still 30% below its peak. And considering the potential billionaire lawsuits the company is facing, investors have lots of reasons to continue to exit the stock.
In retail, there’s no such thing as a break. It seems that Amazon may be the next domino to fall, and we shouldn’t be surprised to hear about more store closings, layoffs, and even bankruptcy if the retailer doesn’t come up with a plan to fix things up soon enough.
www.msn.com/en-us/money/companies/amazon-reportedly-used-a-secret-algorithm-to-jack-up-prices/ar-AA1hE4Dd
www.forbes.com/sites/willskipworth/2023/10/03/amazon-allegedly-used-secret-algorithm-to-raise-prices-on-consumers-ftc-lawsuit-reveals/