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Amazon has modified its search algorithm to boost its own products despite the concerns expressed by employees opposed to change, the Wall Street Journal reported today.
The change was made at the end of last year and was "challenged internally," reported the WSJ. The people who worked on the project told the WSJ that "Amazon has optimized the secret algorithm that ranks ads so that instead of showing customers primarily the most relevant and best-selling ads, their research – as it has been doing for more than a decade – also gives a boost to the most profitable items for the company. "
The goal was to focus on products manufactured by Amazon as well as third-party products that have a significant place in "what the company calls" contribution profit, "considered a better measure of a product's profitability because it takes account for non-fixed expenses such as transportation and delivery costs, advertising, leaving the remaining amount to cover Amazon's fixed costs, "said the WSJ.
Amazon made the change indirectly, reported the WSJ. Instead of adding profitability to the algorithm itself, Amazon has modified the algorithm to prioritize factors in relation to profitability, the article says.
When contacted by Ars, Amazon said that it did not optimize the ranking of its search results in terms of profitability.
In a statement, Amazon said:
The Wall Street Journal is deceived. We explained in detail that their "scoop" from anonymous sources was not factually accurate, but they still pursued the story. The fact is that we have not changed the criteria we use to rank search results to include profitability. We present the products that customers will want, whether it be our own brands or the products offered by our commercial partners. As any store would do, we consider the profitability of the products we list and present on the site, but this is only a measure and not a determinant of what we show our customers.
Amazon also gave us the same statements as those provided to the Journal. But these statements do not necessarily refute the main point of the WSJ, namely that Amazon has modified the algorithm in order to prioritize profitability "without adding it directly to the algorithm". Amazon acknowledged having examined "long-term profitability" when testing new search capabilities.
The control of Amazon on the platform has been studied
The report was released while Amazon and other major Web companies are facing a congressional antitrust investigation to find out if they abuse the control they exert on their platforms. forms. In a letter sent Friday to Amazon's CEO, Jeff Bezos, the House of Representatives' Judiciary Committee called for communications to the executives regarding "the algorithm that determines the ranking of the search." products on the Amazon platform ".
Amazon's lawyers rejected a first proposal "to add profits directly into the algorithm", fearing that this would "create problems with antitrust regulators," the newspaper reported. This concern is partly explained by a fine of 2.42 billion euros imposed by the European Commission to Google in 2017 for "abuse[ing] its market dominance as a search engine by giving an unlawful advantage to another Google product, its price comparison service. "
Amazon told Ars that "its private label products only account for about 1% of our total sales.This is much less than other retailers, many of whom have private label products representing 25% or more of their sales ".
Altering the algorithm of Amazon
Amazon "refused to discuss the inner workings of its algorithm," says the WSJ report. But the newspaper reports this information, based on its sources:
When engineers test new variables in the algorithm, Amazon compares the results to a handful of metrics. These measures include unit sales of ads and the dollar value of listing orders. Positive results for the metrics were correlated with high customer satisfaction and helped determine the ranking of the ads presented to the customer.
At present, engineers should consider another measure – improving profitability – said the people who worked on the project. The variables added to the algorithm would essentially become what one of these people calls "proxies" for profit: the variables would correlate with improving the profitability of Amazon but an outside observer might not be able to say it. Variables could also be intrinsically beneficial to the client.
In order for the algorithm to understand what was most cost-effective for Amazon, engineers had to import contribution income data for all items sold, these people said. The laborious process involved extracting shipping information from Amazon warehouses to calculate the benefit of the contributions.
Amazon engineers have added new variables to the algorithm to ensure that search results "get better results on the profitability metric," but a newspaper source "refuses to indicate the nature of these new variables, "says the report.
The WSJ report continued:
A review board that approves all additions to the algorithm returned engineers if their proposed variable produced search results with a lower score on the profitability metric, said this person. "You create an incentive system for engineers to build features that directly or indirectly improve profitability," said the manager. "And that's not a good thing."
Amazon's responses to the WSJ and Ars pointed out that other factors may still prevail over the profitability of search results. Amazon pointed out that this has recently improved the ability to find items that can be delivered on the same day, even if it does hurt profitability, for example.
"When we test new features, including search features, we look at a number of metrics, including long-term profitability, to determine the impact of these new features on the customer and customer experience. on our business, as would any rational store, but we do not make decisions based on this metric, "said Amazon.
Amazon often claims its commitment to customer service and Bezos said last year that the single most important factor in Amazon's success "is the obsessive-compulsive focus on the customer as opposed to the customer." obsession with the competitor ".
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