US says Amazon crippled moms-and-kids startup Zulily

Amazon used a secret algorithm that essentially helped the company raise prices on other online sites and ‘destroyed’ some internal communications as the Federal Trade Commission was investigating the company, according to a newly unredacted portions of the agency's antitrust lawsuit against the ecommerce giant unveiled Thursday, Nov 2. — AP

Heading into the holiday shopping season a few years back, ecommerce upstart Zulily mounted a bold challenge to Amazon.com Inc: Zulily would beat or match the prices of its cross-town Seattle rival, on any product.

Amazon moved quickly to eliminate the threat. The company trained its pricing algorithms and competitive monitoring teams on Zulily, and began punishing merchants who offered lower prices on the rival site by limiting the visibility of their products on Amazon, according to newly unredacted portions of a Federal Trade Commission lawsuit. “Because they could not afford the retaliation meted out by Amazon’s anti-discounting scheme, several suppliers stopped selling to Zulily altogether,” the FTC said.