This article originally ran on ProPublica.org and is republished here with permission.
One day recently, we visited Amazon's website in search of the best deal on Loctite super glue, the essential home repair tool for fixing everything from broken eyeglass frames to shattered ceramics.
In an instant, Amazon's software sifted through dozens of combinations of price and shipping, some of which were cheaper than what one might find at a local store. TheHardwareCity.com, an online retailer from Farmers Branch, Texas, with a 95 percent customer satisfaction rating, was selling Loctite for $6.75 with free shipping. Fat Boy Tools of Massillon, Ohio, a competitor with a similar customer rating was nearly as cheap: $7.27with free shipping.
The computer program brushed aside those offers, instead selecting the vial of glue sold by Amazon itself for slightly more, $7.80. This seemed like a plausible choice until another click of the mouse revealed shipping costs of $6.51. That brought the total cost, before taxes, to $14.31, or nearly double the price Amazon had listed on the initial page.
What kind of sophisticated shopping algorithm steers customers to a product that costs so much more than seemingly comparable alternatives?
One that substantially favors Amazon and sellers it charges for services, an examination by ProPublica found.
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Amazon often says it seeks to be "Earth's most customer-centric company." Jeffrey P. Bezos, its founder and CEO, has been known to put an empty chair in meetings to remind employees of the need to focus on the customer. But in fact, the company appears to be using its market power and proprietary algorithm to advantage itself at the expense of sellers and many customers.
Unseen and almost wholly unregulated, algorithms play an increasingly important role in broad swaths of American life. They figure in decisions large and small, from whether a person qualifies for a mortgage to the sentence someone convicted of a crime might serve. The weightings and variables that underlie these equations are often closely guarded secrets known only to people at the companies that design and use them.