Federal Trade Commission sues Amazon: made $1bn by manipulating prices, abused monopoly power

The Wall Street Journal revealed part of the FTC's blockbuster lawsuit against Amazon: the company developed and deployed a "secret algorithm" designed to spike prices Internet-wide and see what stuck. Ars Technica summarizes the paywalled article and the FTC's legal action.

As a result, Amazon has successfully taught its rivals that lower prices are unlikely to result in increased sales—the opposite of what should happen in a well-functioning market," the FTC alleged.

Amazon stopped using the algorithm in 2019—for no clear reason, sources told the WSJ.

FTC spokesman Douglas Farrar told the WSJ that the agency wants more public access to redacted information in the complaint and continues to "call on Amazon to move swiftly to remove the redactions and allow the American public to see the full scope of what we allege are their illegal monopolistic practices."

A lot of enshittification like this flowed from plain old predatory pricing: all the big winners of the internet economy used venture capital or their own long-term profits to sink incumbents and make markets unprofitable, and then simply raised prices once they obtained market share. Amazon, Uber, Google, etc., all used to be cheap—and now they are expensive.