GoKawiilNewly unsealed emails reveal the sneaky ways that Amazon colludes with rivals to raise prices across the Internet on “everything from diapers to clothing to furniture,” California Attorney General Rob Bonta alleged in a press release Monday.
“Amazon and a competitor will knowingly stop price matching each other, so that one retailer can increase its price, and the other retailer can match to the new, higher price,” Bonta alleged, pointing to one of three such schemes described in Amazon emails. “Thus, both competitors start selling at a higher price, increase their profits, and consumers pay more.”
The emails surfaced in a lawsuit that the state of California filed in 2022, accusing Amazon of wielding its tremendous influence as the world’s largest retailer to pressure vendors into increasing prices on rival e-commerce websites or removing products from cheaper platforms entirely. According to The New York Times, these emails offer “a rare behind-the-scenes look at how Amazon operates its $2.66 trillion empire.”
Three ways Amazon allegedly rigs prices
Amazon works in three ways to pressure vendors into manipulating competitor prices, Bonta alleged.
In one supposed scheme, Amazon proposes price matching by agreeing to increase the price of a product or temporarily pause its sales, which then allows the other retailer to raise its price.
Another route Amazon frequently takes flips that scheme. When Amazon sees a rival offering a product at a price it considers unprofitable, it pressures vendors to get the rival to raise their price to a level Amazon likes. Once the rival raises its price, Amazon then matches it.
Finally, Amazon allegedly follows a third, arguably more aggressive, path to get vendors to remove products entirely from platforms offering lower prices. That way, Amazon won’t be forced to lower its price to compete.
All three scenarios raise prices for consumers, Bonta alleged.
In most examples, Amazon’s requests for price increases were met with urgency. Some prices spiked within a day, as vendors allegedly feared that Amazon might drop them from the platform or otherwise punish them for allowing cheaper sales elsewhere.