Amazon Changes Algorithm to Promote More Profitable Products, Says WSJ
It wasn’t’ too long ago that we reported on the government’s investigation into Amazon’s misuse of the “Amazon’s Choice” badge, and now the e-commerce giant has been called out by the Wall Street Journal for changing its algorithm yet again. According to several sources that worked on the “secret algorithm,” Amazon has been promoting products with greater profit margins for the last year or so instead of displaying products based on user’s search terms.
Despite internal opposition, Amazon’s Seattle-based retail team pressured the Palo Alto, California-based search team (referred to as A9 engineers) to boost Amazon-made products and other private-label brands that rank high in “contribution profit.” According to the WSJ, contribution profit is “considered a better measure of a product's profitability because it factors in non-fixed expenses such as shipping and advertising, leaving the amount left over to cover Amazon's fixed costs,"
As expected, Amazon is denying the allegations, and was quick to respond with a tweet after the news broke.
.@WSJ story based on anonymous sources is wrong. We have not changed the criteria we use to rank search results to include profitability. We feature products customers want, regardless of whether they are our own brands or products offered by our selling partners.
— Amazon News (@amazonnews) September 16, 2019
They also released the following statement:
The Wall Street Journal has it wrong. We explained at length that their 'scoop' from unnamed sources was not factually accurate, but they went ahead with the story anyway. The fact is that we have not changed the criteria we use to rank search results to include profitability. We feature the products customers will want, regardless of whether they are our own brands or products offered by our selling partners. As any store would do, we consider the profitability of the products we list and feature on the site, but it is just one metric and not in any way a key driver of what we show customers.
Ironically enough, Amazon is already facing a few antitrust probes already including one alongside Google, Facebook, and Apple. Last week, house lawmakers requested that the tech giants release their personal communications to figure out of there is any evidence of anticompetitive behavior. Then there's the EU antitrust probe over the treatment of third-party merchants, and a letter that needs answering by CEO Jeff Bezos as to whether the "Amazon's Choice" button also favors Amazon's own products.