Amazon used a covert algorithm called “Project Nessie” to deliberately inflate prices across the entire internet and, by its own internal assessment, the operation was “an incredible success” that extracted over $1 billion (enough to cover a full year of groceries for more than 500,000 families) directly from American households.

The Trap: How Amazon Seized Control of Online Retail

Amazon began as a bookstore in 1994. By 2021, goods worth more than [REDACTED – Specific figure sealed in source] billion were sold through Amazon’s U.S. online store. That amount exceeds the entire 2021 gross domestic product of 145 countries. Amazon today captures more sales than the next fifteen largest U.S. online retail firms combined.

The FTC’s complaint describes what it calls a “flywheel”: Amazon attracts shoppers, which attracts more sellers, which expands product selection, which attracts more shoppers, which generates more data and reviews, which reinforces Amazon’s advantage. The flywheel spins faster with every turn. The point of Amazon’s illegal strategy, according to the complaint, is to make sure no rival ever gets access to enough shoppers or sellers to build their own version.

Jeff Bezos himself explained the logic in writing: “Online selling is a scale business characterized by high fixed costs and relatively low variable costs. This makes it difficult to be a medium-sized e-commerce company.” Amazon did not just benefit from this reality. Amazon actively enforced it.

The Buy Box: The Button That Controls Everything

Nearly 98% of all purchases on Amazon flow through a single button called the “Buy Box.” It is the “Add to Cart” and “Buy Now” display on a product page. Amazon controls which seller appears in that box using a proprietary algorithm. Sellers who fall out of the Buy Box, according to Amazon’s own internal records, see their sales “tank.” Fewer than 3% of purchases on Amazon come from offers outside the Buy Box.

Amazon uses Buy Box exclusion as a punishment. Sellers who offer lower prices anywhere else on the internet get knocked out. The result: sellers are effectively barred from competing on price anywhere, on any platform, not just Amazon’s. Amazon’s anti-discounting surveillance web crawls the entire internet looking for discounts to penalize.

The Punishment Menu: Suppression, Erasure, and Exile

Amazon levies graduated punishments on sellers who dare to offer lower prices elsewhere. The lightest penalty removes a seller from the Buy Box. Heavier punishment buries the seller so far down search results they become functionally invisible. Amazon also erases a product’s price from public view entirely, making it impossible for shoppers to even find the deal. For the most important sellers, Amazon maintains a secret contractual requirement it publicly claimed to have abolished in 2019. If those sellers are caught discounting elsewhere, the penalty is total expulsion from Amazon’s Marketplace.

Amazon’s own internal documents describe these tactics as having a “punitive aspect.” The FTC’s complaint documents that Amazon recognized the optics: when it dropped its explicit price-parity contracts after a U.S. senator called for antitrust scrutiny, Amazon’s own executives noted internally that keeping the underlying enforcement while dropping the paperwork would appear “not only trivial but a trick and an attempt to garner goodwill with policymakers amid increasing competition concerns.” Amazon did it anyway.

The consequence spreads far beyond Amazon’s platform. Because sellers fear punishment, they use their inflated Amazon price as a floor everywhere else. An executive from a rival online retailer confirmed to investigators that Amazon’s conduct forces sellers to “raise prices on other platforms where their cost base is potentially lower.” When Amazon raises its fees, shoppers pay more everywhere, including stores that have nothing to do with Amazon.

Project Nessie: The Secret Price Machine

Amazon did not wait for sellers to raise prices organically. Amazon built its own algorithm to do it for them. The project was codenamed “Project Nessie,” after the mythical creature: something lurking beneath the surface, invisible, massive, and real. The algorithm identified specific products where Amazon predicted other online stores would follow Amazon’s price increases. When Amazon raised the price and competitors matched it, Nessie kept the higher price in place.

Amazon’s internal assessment of this program: “an incredible success.” The success metric was the over $1 billion (enough to pay the annual grocery bills of more than 500,000 American families, or cover a full year of rent for approximately 27,000 households paying the U.S. median) in excess profit extracted from American households. This was money pulled directly from the pockets of working people who had no way to know the price they were paying had been artificially inflated by an algorithm running in secret.

Amazon ran Project Nessie strategically. According to the FTC’s complaint, Amazon turned the algorithm off during periods of heightened public scrutiny and turned it back on “when it thinks that no one is watching.” This is deliberate, calculated concealment: a company that understood it was doing something wrong, calibrating its wrongdoing to avoid getting caught.

The Game Theory of Price Suppression

Project Nessie operated in concert with a separate first-party pricing algorithm designed by Amazon’s former CEO of Worldwide Consumer, Jeff Wilke. Wilke designed the algorithm explicitly to avoid what he called “a perfectly competitive market” — the kind where companies lower prices to compete for customers. His solution: a “game theory approach” where Amazon never makes the first move but instantly copies rivals’ price cuts to the penny, ensuring that discounting never builds a competitor’s market share. The goal was to make price competition pointless.

As a result of this conduct, Amazon’s own internal documents predicted “prices will go up.” Wilke believes that prediction came true. The algorithm worked exactly as designed: rivals stopped trying to compete on price because doing so produced only lower margins, never greater market share. Tens of millions of American households paid more than they would have in a competitive market, and they had no way to know why.

The Fulfillment Chokehold: Pay Up or Disappear

Amazon runs a shipping and warehousing service called Fulfillment by Amazon, or FBA. Sellers store their products in Amazon’s warehouses, Amazon packs and ships orders, and Amazon charges fees for the privilege. On the surface it sounds convenient. In practice it is a trap with one exit: pay Amazon, or your products become invisible to Prime subscribers.

In 2021, more than [REDACTED – Specific figure sealed in source]% of all units sold on Amazon were Prime-eligible. Prime covers more than [REDACTED – Specific figure sealed in source]% of all U.S. households, with penetration reaching more than [REDACTED – Specific figure sealed in source]% in some zip codes. Prime subscribers account for more than [REDACTED – Specific figure sealed in source]% of all purchases by dollar amount on Amazon’s U.S. online superstore. The average Prime subscriber spends [REDACTED – Specific figure sealed in source] times more per year on Amazon than a non-Prime shopper. To reach Prime subscribers, sellers must use FBA. Period.

Amazon raised FBA fulfillment fees by approximately 30% in just two years, from 2020 to 2022. In 2020, more than [REDACTED – Specific figure sealed in source] sellers used FBA to fulfill more than 5.5 billion orders in the United States. Amazon estimated it would take [REDACTED – Specific figure sealed in source]% of all sales revenue earned by FBA sellers in 2022. Internal documents confirm what sellers already knew: Amazon recognizes that sellers find “it has become more difficult over time to be profitable on Amazon” due to “increasing fees and costs.”

The “Oh Crap” Moment That Explains Everything

Amazon briefly relaxed its requirement that sellers use FBA to access Prime eligibility. According to the complaint, both shoppers and sellers immediately welcomed the change. But an Amazon executive described to colleagues what he called an “‘oh crap’ moment” when he realized the policy change was “fundamentally weakening [Amazon’s] competitive advantage in the U.S. . . . as sellers are now incented to run their own warehouses and enable other marketplaces with inventory that in FBA would only be available to our customers.”

That moment of competitive fear produced a swift response: Amazon reversed course and resumed coercive FBA requirements. The executive’s panic is the clearest possible admission that the FBA requirement exists to suppress competition. If independent fulfillment providers competed freely for seller business, they would achieve the scale needed to lower their costs, sellers could list across multiple platforms cheaply, rivals would gain inventory access, and Amazon’s moat would shrink. Amazon understood this, panicked, and locked the gate.

The Non-Financial Ledger: What Money Cannot Measure

The harm in this case has a dollar figure: over a billion dollars stolen through Project Nessie alone. But the bill of damages that cannot be counted in revenue spreadsheets runs deeper and wider than any settlement number could capture. Consider what it means to be a small seller on Amazon: you have built a product, sourced materials, hired people, and finally found customers. Then you discover that Amazon’s algorithm has quietly removed you from the Buy Box because you listed your product at a lower price on your own website. Your sales collapse overnight. You did not break a rule you knew about. You triggered an automated punishment system designed specifically to prevent you from doing the thing a competitive market is supposed to reward: offering a better deal.

These are the hundreds of thousands of small and mid-sized businesses that built their livelihoods on the promise of Amazon’s platform. The complaint documents that as of the first quarter of 2021, there were over 560,000 active sellers on Amazon’s U.S. Marketplace. Many of them, according to the complaint, “live in constant fear” of Amazon’s enforcement mechanisms. That fear is not an abstract economic disincentive. It is a daily psychological reality for entrepreneurs who cannot afford to experiment with pricing because a single automated trip-wire could wipe out their income. Fear is a management tool Amazon wields with precision.

For American shoppers, the betrayal is quieter but just as real. Amazon’s search page was supposed to surface the best, most relevant products. According to internal Amazon documents cited in the complaint, executives knew that the platform’s shift toward pay-to-play advertising made it “almost impossible for high quality, helpful organic content to win over barely relevant sponsored content.” They called the irrelevant ads “defects.” Jeff Bezos personally ordered his executives to “[a]ccept more defects” because the revenue justified it. Every shopper who bought a worse product at a higher price because a paid ad buried the better option is a casualty of that order. They never knew they were being steered.

Then there is the Prime trap. Amazon’s internal documents confirm the company used “misleading designs” to trick shoppers into signing up for Prime subscriptions they did not want, generating “mistaken signups” Amazon knew about and chose not to fix. The cancellation process was so deliberately complex that Amazon’s own engineers named it after the “Iliad,” Homer’s 15,693-line epic poem. The Prime fee has nearly doubled from the original $79 to $139 per year ($14.99 monthly). A former Amazon employee who helped build Prime said the pricing “was never really about the seventy-nine dollars. It was really about changing people’s mentality so they wouldn’t shop anywhere else.” Tens of millions of households locked into a subscription designed from day one to eliminate the impulse to look anywhere else. That is not a membership program. That is a behavioral cage built for profit.

Legal Receipts: Damning, in Their Own Words

“Amazon has quietly and deliberately raised prices for shoppers through a covert operation called ‘Project Nessie.’ Explicitly intended to inflate the prices that shoppers pay, Amazon’s Project Nessie has already extracted over a billion dollars from American households.” — FTC Second Amended Complaint, Section I, Paragraph 4

“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.'” — FTC Second Amended Complaint, Section I, Paragraph 5, citing Amazon internal documents

“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.” — FTC Second Amended Complaint, Section I, Paragraph 5

“Amazon internally admits to using ‘misleading designs’ for its user interfaces ‘to mislead or trick users to make them do something they didn’t want to do, like signing up for a recurring bill, favoring shareholder value over user value.'” — FTC Second Amended Complaint, Section IV.D, Paragraph 107

“Amazon executives systematically and intentionally deleted internal communications using the ‘disappearing message’ feature of the Signal messaging app. Amazon prejudicially destroyed more than two years’ worth of such communications — from June 2019 to at least early 2022 — despite Plaintiffs’ instructing Amazon not to do so.” — FTC Second Amended Complaint, Section I, Paragraph 39

“Amazon recognized that dropping an explicit contractual requirement while continuing to use other anti-discounting tactics would appear ‘not only trivial but a trick and an attempt to garner goodwill with policymakers amid increasing competition concerns.'” — FTC Second Amended Complaint, Section I, Paragraph 15

“Prime pricing ‘was never really about the seventy-nine dollars. It was really about changing people’s mentality so they wouldn’t shop anywhere else.'” — FTC Second Amended Complaint, citing a former Amazon employee involved in Prime’s development, Paragraph 103

Societal Impact Mapping: Who Pays the Real Price

The “Cost of a Life” Metric

What Now? The Watchlist and the Fight

The FTC filed this complaint alongside the attorneys general of 20 states and territories, including New York, California, Pennsylvania, Massachusetts, Michigan, Minnesota, and more. That coalition represents the largest coordinated antitrust action against a tech monopolist in a generation. The lawsuit asks the court to end Amazon’s illegal conduct, strip away the monopoly profits, and restore competition.

What You Can Actually Do

Support local and independent retailers directly. Every purchase made at a small business, independent marketplace, or locally owned shop is a dollar that does not fund Amazon’s monopoly maintenance budget. Look for cooperative buying networks, local business alliances, and mutual aid purchasing circles in your area. If you organize workers, know that Amazon’s suppression of seller competition is structurally connected to its suppression of labor competition. The same coercive power that punishes sellers for discounting is the same power used to extract maximum labor output at minimum cost. Solidarity with sellers and solidarity with workers in Amazon’s warehouses point in the same direction.