Every consumer should read this thread. The antitrust investigation into Amazon, likely kneecapped by Team Trump, is more important than we think.
Algorithmic price coercion is destroying small (and honest) businesses and robbing us of billions.
#amazon #jeffbezos #business #prime #bezos #ftc #sec
Stacy Mitchell has the best command of this subject. She explains how Amazon's ability to match any discount absolutely shreds competitors trying to give you a lower price. To hide these powers from nosy reporters, Amazon shuts off the magic algorithm during holiday shopping season and Prime Day.
wild thread. There are no deals!!
17. If the case succeeds, antitrust law may finally catch up to how digital markets work. If not, online price swings will continue to masquerade as competition, even as prices stop performing the work we depend on them to do. Read the full piece:
16. This is why so much may turn on the antitrust case against Amazon, scheduled to go to trial next March. 17 states have joined the case, and could carry it forward on their own if Trump bails. An early ruling from the judge is notably encouraging:
15. The risk is more than higher prices. Left unchecked, algorithmic pricing will undermine market functionality. Price changes are meant to carry information—about demand, scarcity, opportunity. But today they're often just noisy artifacts of algorithms reacting to one another.
14. Lawmakers have failed to grapple with the fact that a dominant platform equipped with powerful pricing technology can raise prices across a market without doing any of these things. Instead, it uses its own price changes to provoke responses that create feedback loops.
13. Although lawmakers are starting to target pricing algorithms, so far they’re focused only on scenarios where firms rely on the same software, share non-public information, or coordinate indirectly. Or when they use customer data to charge people different prices.
12. Amazon uses another algorithm to safeguard this revenue stream: it scans the web and punishes sellers who charge less elsewhere by stripping them of the Buy Box. Lose the Buy Box, lose your sales. The result: as Amazon’s fees rise, sellers raise prices everywhere.
11. Amazon has no incentive to stop this. It takes roughly 45% of every third-party sale in fees, so higher prices mean more revenue and profit.
10. These tools have learned to exploit Amazon’s rules, says @tedtatos.bsky.social. One tactic is a “wait my turn” strategy: Instead of undercutting the seller with the Buy Box, they hold back, allowing that seller to raise prices, knowing they will get their own turn at the higher price.
9. Amazon shapes pricing decisions not only across the web, but within its own third-party marketplace. To survive in Amazon’s ecosystem, most sellers rely on third-party “repricing” software. Popular tools advertise “AI-driven pricing” to “avoid price wars.”
8. This is a novel kind of monopoly power. Economists Zach Brown and Alexander MacKay call it “algorithmic coercion.” And its impact “can be worse for consumers than if firms explicitly coordinated on high prices.” The FTC says Nessie generated $1B+ in extra profit in 3 years.
7. Another algorithm, code-named Project Nessie, went further. It learned to predict when rivals were likely to follow a price hike. It raised prices in those instances — allowing Amazon to charge more, knowing that shoppers were unlikely to find a cheaper option.
6. Over time, competitors’ algorithms learn and adapt. They learn that discounting doesn’t work. So instead of cutting prices, they raise them. Amazon follows. Prices go up across the web without any coordination.
5. One is an “anti-discounting” algorithm that matches competitors’ price changes instantly to the penny. When a rival offers a discount, Amazon matches it; when rivals raise prices, Amazon follows. This denies other retailers a way to win customers by lowering prices.
4. This is at the center of the antitrust case brought against Amazon by the FTC and 17 states. The complaint targets three pricing algorithms that Amazon uses to thwart competitors and maintain its grip on online retail.
3. Lawmakers are starting to look at algorithmic pricing, but their focus is only on collusion and surveillance pricing. They haven’t caught up to this: a dominant firm using its own algorithms to unilaterally lift prices across a market without coordinating with others.
2. We tend to see online price swings as evidence of competition. But they often reflect something else: Amazon using algorithms not just to adjust its own prices, but to track how rivals react, probe their strategies and ultimately learn how to induce them to raise their prices.
1. Amazon has built powerful pricing algorithms that have learned how to steer prices upward — not just on Amazon, but across the web. I have a new piece on how these algorithms work, and how they help sustain Amazon’s monopoly.
2. Rather than let Amazon's bots tank their sales on Amazon, sellers raised prices on other sites.
1. New evidence shows Amazon compelling specific sellers to hike their prices on other shopping sites. This is from depositions in the California antitrust case obtained by The Guardian. Expect a lot more to come out at trial. This drives prices up & is why Amazon has an iron grip.
City-owned broadband providers outperform their big ISP competitors on internet speeds, a new study finds.
At the time he invented the shopping cart, he had sold Sun and bought Humpty-Dumpty in Oklahoma City. Both Sun and Humpty were exactly the kind of small, independently owned chains that have disappeared because of lack of RPA. And he was the kind of inventive entrepreneur that we need more of.
3. Amazon has been telling cities and schools that they can help their local businesses by buying through its platform. But Amazon doesn't disclose the size of the fees it charges these businesses — and how big of a cut of their sales it's pocketing for itself.
2. Local school and municipal officials, and taxpayers, deserve answers to all of the questions she's asking.
1. It's great to see @warren.senate.gov pressing Amazon CEO Andy Jassy on the shady tactics Amazon is using to overcharge schools and cities for everyday supplies — including sham contracts with algorithmic-driven dynamic pricing.
Want to help your city and local schools stop buying from Amazon? Watch our recent webinar featuring people who successfully pushed their local governments to buy from local suppliers instead — plus practical tips for how to do it in your town.
www.youtube.com/watch?v=zIS3...
