It seems Amazon may be putting profits before customers.
The Wall Street Journal has reported that the retail giant tweaked its product-search algorithms in order to favor its own ‘private label’ and higher profit margin products– instead of what is most relevant for consumers.
Programmers involved with the search algorithm are said to have opposed the change, as Amazon’s principles stress they ‘work to earn and keep customer trust’.
The changes were cited by sources familiar with the situation, who claimed Amazon’s product-search system was changed last year.
The Wall Street Journal has reported that the retail giant tweaked its product-search algorithms in order to favor its own ‘private label’ and higher profit margin products– instead of what is most relevant for consumers
Prior to the switch, algorithms would first show products that were bestsellers or relevant to what customers were looking to purchase.
Now, the technology is said to produce items that put more profits in the retail giant’s pockets.
It is also claimed that engineers in charge of the algorithms, a group called A9, were instructed to boost the firm’s own ‘private label’ product, but the report does not confirm these changes.
However, not everyone within the company stood behind the shift.
Retail executives believed Amazon should highlight in-house brands, similar to how grocery stores promote their own brands, while the algorithm engineers, a group called A9, argued that it wasn’t in customers’ best interest, according to the Journal.
However, an Amazon spokesperson told DailyMail.com: ‘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.’
The spokesperson continued to explain that Amazon features ‘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.’
The spokesperson also noted that ‘ the retail market Amazon operates in is almost 25 trillion dollars, and the firm represents less than one percent of global retail and less than four percent of U.S. retail.
Retail executives believed Amazon should highlight in-house brands, similar to how grocery stores promote their own brands, while the algorithm engineers, a group called A9, argued that it wasn’t in customers’ best interest, according to the Journal
The new report seems to be digging Amazon into a deeper whole with officials, as just two months ago, the company was under EU antitrust fire for how it was using customer data ‘to reinforce their market power’, Reuters reported.
Amazon could be facing a massive fine after European competition regulators launched a fresh probe into its practices.
The investigation will focus on whether the US giant uses data from independent retailers to unfairly gain an advantage over rivals in the market.
European Competition Commissioner Margrethe Vestager, who can fine companies up to 10 percent of their global turnover and force them to change their business practices, said the issue was crucial as increasing numbers of Europeans shop online.
‘E-commerce has boosted retail competition and brought more choice and better prices. We need to ensure that large online platforms don’t eliminate these benefits through anti-competitive behavior,’ she said.
Amazon said it would cooperate fully with the EU investigation. The company reached a deal with Germany’s antitrust authority on Wednesday to overhaul its terms of service for third-party merchants.
The Commission had been struggling to define the market in which Amazon operates in order to identify where the competitive harm could have been, sources said.
They said the issue was whether to look at Amazon in the overall retail market or in its own niche.