{"id":6212,"date":"2023-11-02T19:27:05","date_gmt":"2023-11-02T19:27:05","guid":{"rendered":"https:\/\/connectwithfund.com\/business\/jeff-bezos-engineered-amazons-shift-toward-irrelevant-ads-newly-unredacted-ftc-lawsuit-alleges\/"},"modified":"2023-11-02T19:27:06","modified_gmt":"2023-11-02T19:27:06","slug":"jeff-bezos-engineered-amazons-shift-toward-irrelevant-ads-newly-unredacted-ftc-lawsuit-alleges","status":"publish","type":"post","link":"https:\/\/connectwithfund.com\/?p=6212","title":{"rendered":"Jeff Bezos engineered Amazon\u2019s shift toward irrelevant ads, newly unredacted FTC lawsuit alleges"},"content":{"rendered":"
\n

\n Amazon founder Jeff Bezos personally directed a monumental shift in the company\u2019s e-commerce business to embrace online advertising,\u00a0according to a newly unredacted version of an antitrust lawsuit filed this fall by the Federal Trade Commission and 17 states.\n <\/p>\n

\n The moves allegedly\u00a0changed Amazon\u2019s\u00a0trajectory\u00a0and\u00a0deliberately\u00a0juiced the platform\u2019s revenues at the expense of customer experiences.\n <\/p>\n

\n The complaint\u2019s newly unsealed portions, filed Thursday\u00a0in Seattle federal court, uncover a wide range of\u00a0previously\u00a0non-public\u00a0allegations. They also provide novel context on Amazon\u2019s sprawling business, including specific figures that illustrate Amazon\u2019s\u00a0enormous scale and its relationship with third-party sellers on its platform.\n <\/p>\n

\n The filing also\u00a0reveals\u00a0more details about Project Nessie, a secretive\u00a0price-matching algorithm whose characteristics were heavily redacted in the original complaint but that has allegedly earned Amazon more than\u00a0$1 billion\u00a0in excess profits from\u00a0US households, according to\u00a0the\u00a0newly unsealed portions of the complaint.\n <\/p>\n

\n The further evidence and accusations\u00a0were revealed\u00a0after federal and state governments accused Amazon in September\u00a0of running an illegal monopoly, in a landmark case testing the Biden administration\u2019s commitment to a tougher competition enforcement agenda.\n <\/p>\n

\n \u201cAmazon works incredibly hard every day to earn customers trust, and customer feedback on our shopping experience is consistently positive,\u201d said Tim Doyle, an Amazon spokesman. \u201cAmazon works hard to make it fast and easy for customers to find the items they want and discover similar options by providing a mix of organic and sponsored search results based on factors including relevance, reviews, availability, price, and speed of delivery, along with helpful search filters to refine their results.\u201d\n <\/p>\n

\n Doyle pointed to Kantar, an independent data and insights firm, noting that the firm\u00a0found Amazon\u2019s advertising \u201cto be the most useful and relevant to customers around the world.\u201d\n <\/p>\n

\n In the original complaint, the FTC and state plaintiffs\u00a0claimed\u00a0that Amazon has harmed consumers by, among other things, cramming its online marketplace full of irrelevant advertising, which\u00a0allegedly and indirectly raises consumer prices.\n <\/p>\n

\n That decision\u00a0came from the very top, according to the newly unsealed portions of the complaint. In 2014, Bezos, then the company\u2019s CEO,\u00a0allegedly\u00a0instructed his lieutenants to \u201cgo big, very big\u201d on advertising, and in 2016 directed\u00a0his\u00a0subordinates\u00a0to\u00a0expand the company\u2019s ad business further by showing consumers greater amounts of irrelevant ads.\n <\/p>\n

\n Amazon\u2019s internal research showed that even when it showed more ads that\u00a0weren\u2019t\u00a0relevant to users\u2019 searches, \u201cadvertising revenue still increased Amazon\u2019s overall profits by [redacted] million,\u201d the newly unsealed complaint said.\n <\/p>\n

\n The change led to cultural shifts within Amazon to prioritize ad revenue without limits, according to the lawsuit, which claims Amazon executives chose not to put \u201cguardrails\u201d on the irrelevant ads\u00a0when they easily could have.\n <\/p>\n

\n The\u00a0business decision\u00a0appeared to\u00a0reveal\u00a0tensions between the company\u2019s\u00a0search\u00a0and advertising\u00a0priorities,\u00a0the complaint said, with some Amazon executives\u00a0characterizing the ad team\u2019s\u00a0incentives\u00a0as akin to a fox guarding a henhouse,\u00a0or\u00a0like\u00a0the\u00a0proverbial\u00a0scorpion\u00a0who rides\u00a0a frog\u00a0across a river\u00a0but who stings the frog\u00a0halfway across.\n <\/p>\n

\n \u201cIt was in the advertising division\u2019s nature as the proverbial \u2018scorpion\u2019 to poison organic search results,\u201d the complaint said, describing one senior Amazon executive\u2019s\u00a0account of\u00a0the situation.\n <\/p>\n

\n In another situation, Amazon allegedly took steps to promote its own, proprietary products \u2014 such as the Amazon Kindle tablet\u00a0\u2014 as having been recommended by expert reviewers when the Amazon products had not earned such a recommendation.\n <\/p>\n

\n The newly unredacted complaint also dives deep\u00a0on\u00a0Amazon\u2019s alleged use of\u00a0pricing algorithms.\n <\/p>\n

\n In the early 2010s, Amazon discovered that there were certain products it offered for which other retailers would reliably match Amazon\u2019s price. If the Amazon price went up, the competing retailers would increase their prices as well, according to the complaint.\n <\/p>\n

\n Amazon operationalized those insights by creating Project Nessie, an algorithmic\u00a0tool specifically designed to figure out which items\u00a0other retailers would try to price-match. Then Amazon would deliberately raise prices on those items and hold them there, expecting rivals to do the same, the complaint said.\n <\/p>\n

\n Amazon allegedly began using Project Nessie in 2014 and turned it on and off depending on whether it believed it might get caught, according to the complaint.\n <\/p>\n

\n \u201cIn 2018, Amazon estimated that Project Nessie increased Amazon\u2019s yearly profits by $334 million, including nearly $57 million in additional profit from selling higher-priced books and at least $10 million in additional profit in each of twelve other product categories,\u201d the unsealed complaint said.\u00a0\u201cThe sole purpose of Project Nessie was to further hike consumer prices by manipulating other online stores into raising their prices.\u201d\n <\/p>\n

\n Amazon has previously said that its platform has led to lower prices, faster delivery times and other benefits\u00a0for millions of consumers.\n <\/p>\n

\n And it has said that if the antitrust suit is successful,\u00a0Amazon\u00a0could have to raise prices\u00a0on customers for products such as Amazon\u00a0Prime, or\u00a0provide\u00a0slower shipping services.\n <\/p>\n

\n \u201cThe lawsuit filed by the FTC today is wrong on the facts and the law, and we look forward to\u00a0making\u00a0that case in court,\u201d Amazon General Counsel David\u00a0Zapolsky\u00a0said in September.\n <\/p>\n<\/p><\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Amazon founder Jeff Bezos personally directed a monumental shift in the company\u2019s e-commerce business to embrace online advertising,\u00a0according to a newly unredacted version of an antitrust lawsuit filed this fall by the Federal Trade Commission and 17 states. The moves allegedly\u00a0changed Amazon\u2019s\u00a0trajectory\u00a0and\u00a0deliberately\u00a0juiced the platform\u2019s revenues at the expense of customer experiences. The complaint\u2019s newly unsealed portions, filed Thursday\u00a0in Seattle federal court, uncover a wide range of\u00a0previously\u00a0non-public\u00a0allegations. They also provide novel context on Amazon\u2019s sprawling business, including specific figures that illustrate Amazon\u2019s\u00a0enormous scale and its relationship with third-party sellers on its platform. The filing also\u00a0reveals\u00a0more details about Project Nessie, a secretive\u00a0price-matching<\/p>\n","protected":false},"author":1,"featured_media":6213,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[],"class_list":["post-6212","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"yoast_head":"\nJeff Bezos engineered Amazon\u2019s shift toward irrelevant ads, newly unredacted FTC lawsuit alleges | ConnectWithFund<\/title>\n<meta name=\"description\" content=\"Amazon founder Jeff Bezos personally directed a monumental shift in the company\u2019s e-commerce business to embrace online advertising,\u00a0according to a newly\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/connectwithfund.com\/?p=6212\" \/>\n<meta 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