Amazon is facing serious allegations in a Federal Trade Commission (FTC) complaint that claims the e-commerce behemoth manipulated online prices and destroyed internal communications during a government probe. The unredacted version of the complaint, filed in a Washington federal court, sheds light on the secretive operations of Amazon and its impact on American consumers.

The complaint details an algorithmic tool named "Project Nessie," which Amazon reportedly used to induce other online retailers to raise their prices. The tool, active from 2015 to 2019, was designed to increase Amazon's product prices at times when competitors were most likely to follow suit. In April 2018 alone, Project Nessie was used to set prices for over 8 million items, allegedly generating over $1 billion in additional profit for Amazon within three years. The actual cost to consumers, considering the influence on other stores, is speculated to be significantly higher.

Amazon strategically paused the use of Project Nessie during high-traffic periods such as the holiday season and Prime Day to avoid external scrutiny. The tool has been inactive since 2019 due to the ongoing regulatory investigations, including the one leading to the current lawsuit.

Amazon spokesperson Tim Doyle has contested the FTC's portrayal of Project Nessie, stating that the tool was discontinued because it did not function as intended. Doyle insists that the tool aimed to prevent unsustainable low prices due to Amazon's price matching.

The FTC complaint also accuses Amazon executives of systematically deleting internal communications amid the government investigation. The company allegedly used encrypted messaging apps with a "disappearing message" feature, resulting in the loss of over two years' worth of communications. Amazon, however, refutes this claim, asserting that it has cooperated with the FTC by providing access to employee conversations.

The lawsuit goes beyond Project Nessie, targeting Amazon's policies that allegedly penalize sellers for offering lower prices on other platforms and compel them to use Amazon's logistics services. The complaint includes claims under the Sherman Act and the FTC Act, supported by attorneys general from 17 states.

The FTC's suit suggests that Amazon's anti-discounting policies contributed to the demise of Jet.com, an online superstore that aimed to undercut Amazon by not charging seller commissions. Amazon's response to Jet's lower prices was to demote sellers' products from its prominent "Buy Box" if they were cheaper on Jet.com, leading to Jet's eventual closure by Walmart in 2020.

The complaint also touches on a directive from then-CEO Jeff Bezos to increase irrelevant advertisements on Amazon's search results page, which, despite being internally acknowledged as "defects" that degraded customer experience, proved to be "wildly profitable." The company reportedly earned $1 billion from such advertisements in 2015 alone.

Despite the revealing unredacted complaint, certain details remain confidential, such as Amazon's advertising revenue in 2021 and the extent of Amazon Prime's subscription base in the U.S.

As the FTC's lawsuit progresses, it highlights the complex interplay between large tech companies' business strategies and regulatory oversight, with significant implications for market competition and consumer protection.