Previously redacted portions of the Federal Trade Commission’s lawsuit against Amazon allege Bezos gave the go-ahead to make search results worse in favor of increasing advertising revenue

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Regulators blame Bezos for making Amazon worse in new lawsuit
details
Previously redacted portions of the Federal Trade Commission’s lawsuit against Amazon
allege Bezos gave the go-ahead to make search results worse in favor of increasing
advertising revenue
The Washington Post
November 2, 2023
Shoppers having a hard time finding what they’re looking for amid the jumble of ads
on Amazon may have someone new to blame: Amazon founder Jeff Bezos.
Previously redacted portions of the Federal Trade Commission’s antitrust lawsuit
against Amazon made public on Thursday allege that Bezos instructed Amazon
executives to allow more inaccurate search results to increase advertising revenue.
“Amazon has increased not only the number of advertisements it shows, but also the
number of irrelevant junk ads, internally called ‘defects,’” newly public portions of the
lawsuit say. “Mr. Bezos instructed his executives to ‘[a]ccept more defects’ because
Amazon can extract billions of dollars through increased advertising despite worsening
its services for customers.”
The suit also alleges that “Amazon executives internally acknowledge this creates
‘harm to consumers’ by making it ‘almost impossible for high quality, helpful organic
content to win over barely relevant sponsored content.’”
In a statement, Amazon said: “The claim that Amazon leadership directed employees
to accept more advertising defects that would degrade the customer experience is

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grossly misleading and taken out of context, and does not reflect Amazon’s
longstanding dedication to continually improving the customer experience.”
Bezos owns The Washington Post, and its interim CEO, Patty Stonesifer, sits on
Amazon’s board.
The FTC filed its long-awaited suit against Amazon in September, surprising the
industry by arguing that Amazon effectively raises prices for consumers by charging
merchants fees to advertise in its digital marketplace. FTC Chair Lina Khan made a
splash in antitrust with her 2017 paper “Amazon’s Antitrust Paradox,” published when
she was a law student at Yale. But the case she’s making against Amazon today
is notably different from the argument she made six years ago.
It’s not your imagination: Shopping on Amazon has gotten worse
The allegations that Bezos would knowingly degrade the Amazon search experience
for customers are surprising given the billionaire’s much-touted obsession with
delighting customers. At Amazon, all employees must practice “customer obsession,”
which, according to corporate leadership principles, means they must “start with the
customer and work backwards.”
But, in its complaint, the FTC says Amazon executives saw they could make more
money by increasing the number of ads, even if those ads worsened the quality of
search results and harmed the customer experience.
The initial version of the FTC’s lawsuit was heavily redacted. The agency’s legal team
fought for weeks to make more of its claims public.

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At the core of the case against Amazon is the argument that by using algorithms to
automate price matching to competitors, Amazon gained market dominance unfairly.
One of the algorithms the FTC alleges Amazon used to accomplish that goal was
code-named “Project Nessie.” Previously redacted lines in the complaint say Nessie
— which allegedly identified products Amazon could raise prices on and expect
competitors to follow suit — netted Amazon “$1 billion in excess profit.”
In an email statement, Amazon spokesperson Curtis Eichelberger said the FTC
“grossly mischaracterizes” Nessie, which he said Amazon stopped using several years
ago.
“Nessie was used to try to stop our price matching from resulting in unusual outcomes
where prices became so low that they were unsustainable,” Eichelberger said. “The
project ran for a few years on a subset of products, but didn’t work as intended.”
In its suit, the FTC said there are “no technical barriers to Amazon resurrecting — or
even expanding — its use of Project Nessie,” and said the company had considered
using its “old friend Nessie” as recently as January 2022.
New details from the suit also reveal more information about how Amazon allegedly
exerts control over sellers in its marketplace in order to reduce competition. For
example, Amazon enforces strict standards for sellers that make it difficult to sell
anywhere else, the suit says.
The FTC also alleges that Amazon discourages sellers from handling their own
shipping and logistics even when they're just as fast as Amazon because Amazon
didn't want to drive business to competitors like UPS.

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According to the suit, sellers achieved their delivery speed goals 95 percent of the
time in 2018 without Amazon’s help. As a result, “Amazon executives worried” that
allowing sellers to handle their own logistics could “enable competitors to ship fast,”
the suit says.
The concern was so great within Amazon, according to the FTC, that “Amazon’s CEO
of Worldwide Operations wrote that he was ‘losing [his] mind’ after learning that UPS
was advertising that its online retail fulfillment service could fulfill Prime-eligible
orders.”
The Amazon spokesperson said the newly public allegations are misleading and that
sellers shipping independently were significantly slower than Amazon.