In a newly unsealed lawsuit filed by the Federal Trade Commission (FTC) and 17 states, shocking revelations have emerged about Amazon's allegedly anticompetitive algorithmic pricing tool, known as "Project Nessie." The unredacted portions of the suit allege that this tool was used to raise prices on products, resulting in more than $1 billion in earnings for Amazon from US households.

The lawsuit, which was originally filed this fall, initially mentioned Project Nessie but provided limited details about its functionalities. However, the newly disclosed information sheds light on how Amazon's algorithm was allegedly designed to force its retail rivals to increase prices. The suit alleges that this manipulative tactic not only inflated Amazon's revenues but also significantly impacted customers' wallets.

Moreover, the unsealed document revealed that Amazon founder Jeff Bezos personally directed a significant shift in the company's e-commerce strategy to focus on ads, even if they were irrelevant to user searches. Regulators claim that this strategic move deliberately boosted Amazon's revenues at the expense of its customers.

The unsealed complaint, filed on Thursday in a Seattle federal court, contains a wealth of previously undisclosed allegations, providing a deeper understanding of Amazon's vast operations. Notably, it showcases Amazon's immense scale, with more than a billion unique products listed on its website in 2020, 80% of which were from third-party sellers.

The document highlights the enormous power of Amazon's user interface, stating that nearly 98% of all purchases on the platform are made using the highly prominent "Buy Box." This revelation underscores how an advantageous relationship with Amazon can significantly influence a seller's chances of success.

Furthermore, the lawsuit alleges that Amazon executives concealed internal communications from regulators for at least two years by using the disappearing messages function of the encrypted messaging app Signal.

These new pieces of evidence and accusations emerged after the federal and state governments accused Amazon in September of operating an illegal monopoly. The case stands as a crucial test of the Biden administration's commitment to tougher competition enforcement.

Tim Doyle, an Amazon spokesman, defended the company, stating that it works diligently to earn customers' trust and consistently receives positive feedback on its shopping experience. He emphasized that Amazon strives to make product discovery convenient for customers by providing a mix of relevant and sponsored search results based on various factors.

While Amazon argues that its advertising is useful and relevant to customers globally, the lawsuit accuses the company of incorporating irrelevant ads into its platform, indirectly raising consumer prices.

It is alleged that Bezos instructed his subordinates to prioritize advertising efforts, even if the ads were not relevant to users' searches. Internal research reportedly indicated that this strategy increased Amazon's overall profits. These revelations shed light on tensions between the company's search and advertising priorities and the potential negative impacts on customers.

The unredacted complaint also delves into Amazon's alleged use of pricing algorithms. The documents suggest that Amazon identified products for which other retailers would reliably match its prices. To exploit this information, Amazon developed Project Nessie, an algorithmic tool specifically designed to manipulate rivals into raising their prices. The suit claims that Amazon implemented this unethical practice in 2014, periodically toggling the tool on and off to avoid detection.

The lawsuit alleges that Project Nessie resulted in a significant increase in Amazon's yearly profits, with specific figures being redacted. It also asserts that the sole purpose of the algorithm was to hike consumer prices by coercing other online stores to elevate their prices.

Amazon has previously argued that its platform has brought numerous benefits to consumers, such as lower prices and faster delivery times. The company's general counsel, David Zapolsky, has dismissed the antitrust suit as "wrong on the facts and the law."

As the legal battle unfolds, the implications for Amazon and its customers remain uncertain. If the lawsuit succeeds, it could potentially lead to price increases on products like Amazon Prime or slower shipping services, according to previous statements from the company.

The outcome of this landmark case will not only shape Amazon's future operations but also serve as a significant test for the US government's commitment to preserving fair competition in the digital marketplace.