United StatesRetail and e-commerce2014–2019Amazon
Project Nessie predictive pricing
Amazon stopped Project Nessie after using predictions of competitors' reactions to raise retail prices
Problem
Amazon said price matching sometimes pushed prices to unsustainable levels. The FTC alleged that Amazon instead used Project Nessie to increase profits by predicting which competitors would follow its price increases.
Approach
According to the FTC complaint, Amazon deployed Nessie in 2014 to predict competitors' responses and retain higher prices when other stores followed. The FTC alleged that Amazon paused it in 2019 as regulatory scrutiny increased, after repeatedly switching it on and off. Amazon disputed that account and said it scrapped the system because it did not work as intended.
Results
Takeaway
The system's intended purpose and its effects on competing retailers became central disputed issues. Amazon's explanation for discontinuing it differed from the regulator's account.
Categories
- Size
- Large enterprise
- Industry
- Retail and e-commerce
- Business function
- Marketing and sales
- Innovation type
- Process innovation
- AI technology
- Optimization
- Adoption
- Built in-house
- Evidence
- Regulator, audit or court
Sources
Source summaries
The complaint alleged that Nessie predicted whether competitors would follow Amazon's price increases. It identified deployment beginning in 2014, a pause in 2019 and more than $1 billion extracted from shoppers. These were allegations in the enforcement action.
Amazon disputed the FTC's description of Nessie. Its spokesperson said the tool addressed unsustainable price matching and had been scrapped because it failed to work as intended.
Full details are in the original sources.