Amazon has spent the last decade making sure you pay more at Walmart, Target, and Home Depot so you keep thinking Amazon is cheap. For years, as American consumers have felt squeezed by the cost of everything — a frustration documented in surveys of rising consumer rage — Amazon has been the discounter that made it all worse. The company calls its strategy “channel optimization.” The California attorney general, who has been building this case for years, calls it price-fixing. The internal emails call it something more precise: a system so thoroughly engineered to raise prices across the internet that employees were instructed to keep the conversation off written record.
The world’s largest company, the discounter that won the world by promising the lowest price, had built a machine that made everything else more expensive.
Consider the ice cream maker. It was $17.99 at Amazon and Best Buy. Then Best Buy’s price disappeared, and the same machine tripled to $59.99 at Amazon. The sequence is not supply and demand. The emails say Amazon took the supplier’s inventory down, the supplier scrambled to pull it from Best Buy to stop the price competition, and by the end of the day Amazon put it back up at three times the price.
Consider the air fryer. It was $84.99 on Amazon and landed at $149.99 at Newegg. Between those two numbers, Amazon had suppressed the product’s sales on its platform and told the supplier it would stop buying its products unless the supplier reimbursed Amazon for the revenue the discounter had lost by matching competitors’ lower prices. The supplier moved to secure price increases at Target and Newegg and agreed to pay Amazon another $100,000 on top of the $400,000 it had already given back. The supplier’s senior vice president declined to answer questions. “I don’t want to bite the hand that feeds me,” he said.
Consider the leather table lamp, $24.99 at Walmart until an Amazon employee reached out. Two days later the lamp was $39. “We should be good now,” the supplier told Amazon.
The discounter had a problem: it had promised customers the lowest price anywhere, and it had built an algorithm that tracked every competitor’s price to the penny and copied them. When a competitor priced a product below Amazon, the algorithm followed, and Amazon lost money on every sale. The algorithm was the front door. The back door was the compensation demand: Amazon told suppliers they owed the company for the revenue it had lost by matching competitors’ lower prices — the same competitors the suppliers would now need to raise prices on to stop the bleeding. The solution was simple: make sure competitors could not price below Amazon, because making the discounter lose money was more expensive for the supplier than raising everyone else’s price.
Amazon built a surveillance team that grew from about 200 people in 2011 to nearly 2,000 by 2019, monitoring tens of thousands of competitor sites so the algorithm could copy every price move to the penny. It demanded compensation from suppliers for the “lost” margin. The suppliers, who could not afford to lose the world’s largest store, did what the incentives demanded. They called their other retailers. “Hey, if you can make sure this product doesn’t continue to be sold at this lower price point,” as one Amazon vendor manager explained it, “then we don’t have to keep revisiting this discussion.”
“We were at their mercy,” said one supplier. “Because we didn’t have the resources to push back.”
The pattern is not new. Standard Oil ran this play in 1911 with pipelines, and the courts broke it up. Microsoft ran it in 1998 with a browser, and the courts stopped it. Ticketmaster ran it with service fees, and a federal jury in Manhattan this April found the overcharge at $1.72 per ticket. Amazon itself ran a version of it under the “Sold by Amazon” program and settled with Washington state in 2022 for $2.25 million — a fine the discounter could find between the couch cushions.
What is new is the scale and the discipline. A surveillance armada that ramped from 200 to 2,000 employees. An algorithm following every move. A compensation system that punishes the supplier for the discounter’s own promises. And an instruction, written into internal presentations, to “not use email” when discussing the arrangement with suppliers, to keep the arrangement off the books.
Amazon says this is all routine negotiation — that there is no agreement with other retailers, that the emails are a microscopic fraction of its communications, that the whole thing is standard give-and-take between a retailer and its vendors. The same company instructed its staff, in writing, not to put these conversations in writing. The defense requires believing that the company which built a 2,000-person surveillance team and a compensation system designed to push prices up at competitors was accidentally engaged in routine business that happened to need total secrecy.
The California case and the Federal Trade Commission case both go to trial in early 2027.
The supplier who raised his prices at Home Depot after Amazon’s call told a different story. “It didn’t feel good,” he said. “It’s almost understandable. Because they’re so big they can do whatever they want.”
The question in 2027 is not whether the discounter fixed prices. The emails, the presentations, the depositions, the suppliers, the former employees, the “do not use email” instructions, the 2,000-person surveillance team, the algorithm that copied every move — they have already answered that. The question is whether the law is big enough for a company this size, or whether the world’s largest company has simply made itself too large for any law to reach.