FTC sues Amazon – What’s the deal with “Project Nessie”?

The US Federal Trade Commission (FTC) and 17 states filed a landmark lawsuit against Amazon in September, accusing the online giant of being a monopolist that “employs a series of interlocking, competitive and unfair strategies” to consolidate its market power in online retail. In this article, we take a closer look at the lawsuit and the various allegations made by the FTC and the states.

This blog post is about:

  • Price algorithm from Amazon
  • More ads instead of relevant search results
  • Search queries lose relevance
  • High turnover thanks to unfair strategies

Irrelevant ads dilute relevant search results

One of the central accusations concerns the quality of search results on the Amazon platform. Normal search results are downright diluted by misleading and irrelevant advertisements, which is a problem for marketplace providers. This development is forcing them to invest more in advertising in order to make their products visible at all, as their regular search results are being pushed further and further into the background by the flood of ads.

The number of advertisements has more than doubled

Another point of criticism concerns Amazon‘s pricing algorithm. The FTC has taken aim at the company and accuses it of only lowering its own prices when a marketplace provider undercuts them. As a result, these providers find it difficult to get into the coveted “buy box” and therefore generate less sales overall. The accusation is that Amazon is deliberately abusing its market power to put competitors at a disadvantage. Amazon is also said to have more than doubled the number of advertisements on its platform, making it more difficult for shoppers to find relevant products. Internal agreements, which were allegedly deleted, could indicate that Amazon is deliberately restricting transparency in its advertising policy in order to generate more profit. One Amazon executive is even said to have argued that it would be absurd not to increase advertising expenditure, as it is extremely profitable for the company. According to the TFC, Amazon systematically deleted international agreements on the encrypted messaging app “Signal” between June 2019 and the beginning of 2022. The aim is said to have been to conceal internal procedures and thus prevent a federal investigation. Amazon firmly rejects the accusations and describes them as “unfounded” and “irresponsible”.

The secret price algorithm

Project Nessie” is a secret algorithm from Amazon that aims to raise prices in such a way that competitors are forced to follow suit. According to reports, this project has brought Amazon a profit of over one billion dollars. The company allegedly discontinued the project after realizing how explosive the information could become if it were to become public. Company spokesman Tim Doyle emphasizes that the accusations misinterpret the way the tool works. This was developed to prevent unusual price adjustments so that prices do not become so low that they are no longer sustainable. The spokesperson adds that the project did not proceed as originally planned and was discontinued several years ago.

Overall, it remains to be seen how this lawsuit against Amazon will develop. The accusations are manifold and range from influencing search results to unfair pricing practices and collusion. If the allegations prove to be valid, this could have far-reaching consequences for the e-commerce giant and further fuel the debate about monopolies in the digital space.

What impact does Project Nessie have on SEO?

After taking a close look at the current allegations against Amazon, we now turn our attention to a surprisingly closely related topic – search engine optimization, also known as SEO. The question arises as to how this legal turbulence could affect online marketing. What impact will the lawsuit against the e-commerce giant have on the world of SEO?

One of the main points of complaint concerns the influencing of search results on the Amazon platform. The increased placement of advertisements means that products from marketplace providers are pushed into the background in the normal search results. This could mean that sellers will have to invest more in paid advertising to make their products visible. For SEO experts and marketplace providers, this could mean that traditional SEO strategies on Amazon lose effectiveness, while the placement of ads on the platform gains relevance. It is clear that smart adaptation of SEO strategies is necessary to remain successful amidst the growing importance of paid advertising. This means that the careful selection of relevant keywords in product titles and product descriptions, as well as high-quality content, are increasingly coming into focus.

In the ever-evolving world of online marketing, it’s crucial to understand the impact of lawsuits like the one against Amazon on the SEO landscape. The importance of precise keywords and a well thought-out description plays a key role here. A smart keyword strategy can help to improve the ranking of products despite possible changes due to external factors. Well thought-out content that is positively aligned with the relevant keywords therefore remains indispensable. Companies should be aware of how they design their content in order to rank better in search results and thus successfully meet the challenges of the dynamic online world.

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