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The state of California is accusing Amazon of a price-fixing scheme that pushes wholesale vendors to raise prices at competing stores like Target, Walmart, Chewy, and Best Buy. And the state says, after the discovery process, it now has receipts to prove it.
The case centers on several email exchanges between Amazon vendor managers and brands like Levi’s, GlobalOne, Hanes, and Scotts Miracle-Gro. Business Insider obtained the full case file and reviewed hundreds of pages of documents and over a dozen email exchanges to investigate if Amazon uses its influence as the largest e-commerce company in the United States to compel vendors to raise prices at competing retailers. We also spoke with several third-party sellers, like the inventors of the BedSCrunchie, who say they, too, are pressured by Amazon to raise prices at other retailers.
So, has Amazon become too big and powerful? And is it possible the company is using its power to drive up prices everywhere?
The case centers on several email exchanges between Amazon vendor managers and brands like Levi’s, GlobalOne, Hanes, and Scotts Miracle-Gro. Business Insider obtained the full case file and reviewed hundreds of pages of documents and over a dozen email exchanges to investigate if Amazon uses its influence as the largest e-commerce company in the United States to compel vendors to raise prices at competing retailers. We also spoke with several third-party sellers, like the inventors of the BedSCrunchie, who say they, too, are pressured by Amazon to raise prices at other retailers.
So, has Amazon become too big and powerful? And is it possible the company is using its power to drive up prices everywhere?
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TechTranscript
00:00This is the Bed Scrunchy, and it's sold online at three different stores for nearly identical
00:06prices.
00:06The product's inventor says he used to sell for less at Target and Walmart, but now...
00:12Amazon told us basically that if we don't increase our price elsewhere, that this product
00:18will remain unvisible to anybody else to buy.
00:21Amazon has built its reputation on offering the largest selection at the lowest prices.
00:27But California's attorney general alleges that Amazon gets the lowest price by pressuring
00:32other stores to raise theirs.
00:35We have the receipts now.
00:37Take this exchange with Levi's.
00:39An email from December 8, 2021 shows an Amazon vendor manager calling these khakis styles of
00:46concern because they were listed at a lower price on Walmart's site.
00:50The next day, a Levi's employee responded, I talked to Walmart and they have partnered
00:55with us.
00:56The pans ended up at $29.99 on both sites, $3 higher than the original price.
01:02They have so much power over suppliers to essentially kind of monitor prices and make sure that other
01:09retailers never have lower prices than Amazon.
01:13Amazon tells a different story.
01:16In a statement, it told me what California is challenging is common and part of the pro-competitive
01:22give and take between Amazon and its vendors.
01:24And it accused the attorney general of distorting a small number of emails.
01:29I got access to hundreds of pages of documents, including multiple email chains between Amazon employees
01:35and brands to investigate the scope of Amazon's influence.
01:39We have a concentration of economic power in the hands of a few guys, which is unprecedented.
01:46Now that is fundamentally anti-democratic.
01:49So has Amazon become too big and powerful and is it possible that it's using that power
01:56to drive up prices everywhere.
02:00Before we dig further into the emails, let's establish what this case is really about.
02:04Competition.
02:05Competition.
02:06Competition.
02:07Competition is the bedrock of capitalism.
02:10Lowering prices has historically been a way for businesses to compete while benefiting consumers.
02:16Competition is good whenever manifests itself in providing a good at a lower price or at a higher quality.
02:25The California lawsuit alleges that Amazon has removed this crucial element by exerting control
02:31over vendors, individual sellers and other competing retailers.
02:35If we compete and I try to kneecap you, that's not good for society.
02:41None of this happens without leverage, and few companies have as much of it as Amazon.
02:46The company's U.S. sales have steadily increased year after year,
02:50with 2026 projected to be the first time it surpasses $500 billion in sales.
02:56And Amazon has accounted for one-third of all U.S. e-commerce since at least 2017.
03:03We often talk about Amazon as though it were a retailer,
03:06but the better way to think about Amazon is that it is infrastructure.
03:10An infrastructure that has grown to include a lot of different businesses and services,
03:16including storing inventory, shipping orders, advertising products, and providing customer service.
03:21As Amazon found new ways to generate revenue, it made an important investment in sophisticated,
03:29AI-driven algorithms.
03:30Those algorithms are at the heart of another lawsuit against Amazon.
03:35The Federal Trade Commission claims that this man, Jeff Wilkie, conceived of the company's
03:40anti-discounting algorithms, which scour the internet to determine whether products sold on Amazon
03:46are cheaper elsewhere. Then Amazon matches the lower price. Seems harmless, right? Well…
03:54What this does is that it effectively teaches the algorithms of other retailers that they will
04:00never gain business by lowering their price.
04:03According to the FTC, Wilkie stated that he wanted to avoid a perfectly competitive market.
04:09He predicted that if they implemented these strategies that prices will go up.
04:14The California case takes these accusations a step further.
04:17Attorney General Rob Bonta's office first sued Amazon in 2022.
04:22Now, he says new evidence shows that Amazon doesn't just track lower prices,
04:27it pressures brands to raise them at other stores.
04:31In short, California alleges that Amazon is engaged in unlawful price fixing.
04:36And for everyday Californians and everyday Americans who are struggling with affordability,
04:40this is a nightmare.
04:44After years of discovery, Bonta's office says it uncovered key emails.
04:49We needed that time to get more evidence, to learn more, get more details, get more documents.
04:57And rarely do you see such smoking gun, black and white evidence of it.
05:01My team at Business Insider reviewed hundreds of pages of evidence from the case,
05:05like this exchange between three companies.
05:09Amazon, a vendor, Global One, that provides pet treats.
05:12And Chewy, another retailer that's a competitor of Amazon.
05:19Global One sells to both Amazon and to Chewy.
05:22The problem for Amazon was that Chewy listed the same products at a lower price.
05:28We redacted all the names and contact information of the people sending,
05:32receiving and mentioned in the emails.
05:34On December 21st, 2020, a VP at Global One emailed an Amazon employee.
05:39When would Amazon raise their retail and for how long?
05:42I'm working if we pick a date in early January so we can make sure your competitor follows suit.
05:48Two weeks later, the Amazon employee sent a list of 13 Global One products with the old prices
05:54next to the new higher prices Amazon set.
05:58As soon as Amazon raised the prices, Global One would go over to Chewy and say,
06:02we need you to match the prices of Amazon immediately.
06:05Within two days, the Global One VP reported back.
06:09Great news.
06:10I already checked.
06:11The ones that went up on Amazon immediately went up on Chewy.
06:14Smiley face.
06:15Smiley face.
06:16So mission accomplished.
06:17We did it.
06:18Price fixing scheme effectuated and done.
06:21And then overall, this looks like it's working.
06:23Not just overall, this looks like it's working, period.
06:27Overall, this looks like it's working, exclamation point.
06:29There was a part of this exchange where they say, you are the priority.
06:33So like, if you thought that we were prioritizing Chewy over you,
06:37please know, you know, you're most important to us.
06:40Neither Global One nor Chewy responded to our requests for comment.
06:44Internal memos show that Amazon advised employees to talk about prices with suppliers over the phone.
06:50All of these emails that we're seeing are just the times that employees like,
06:55you know, violated the rules, forgot and talked about prices over email,
06:58which suggests to me that this is just the tip of the iceberg of a huge price-fixing operation that
07:05Amazon has going.
07:06There were also emails about headphones, eye drops and an ice cream maker.
07:12On May 12, 2021, an Amazon senior vendor manager emailed a Maximatic rep,
07:18saying that the ice cream maker's price listed at $17.99 at Best Buy was too low.
07:24A Maximatic employee responded the same day,
07:26We have put Best Buy out of stock and we are following up with them on why they had it
07:31at $17.99.
07:33That is an insane price.
07:35The product was removed from Best Buy's site and Amazon listed it at $59.99.
07:40They use words like it's an inhibitor to growth.
07:44It doesn't meet our profitability goals.
07:47And then they say that they want to work together to resolve the problem.
07:52You know, all euphemisms for we need to price fix.
07:56Amazon denies any culpability and says California is taking a handful of communications out of context.
08:03Pushback of the highest order is what we've seen from Amazon.
08:06They have moved to dismiss the case and lost.
08:10They've moved for summary judgment and lost.
08:12They have resisted the entire way.
08:15Amazon did have a recent win.
08:18California submitted a request for an injunction to block Amazon's practices
08:21until a jury can weigh in.
08:23In August, it was denied.
08:25The judge said the evidence California presented in the request was notably thin,
08:30particularly given Amazon's undisputed size.
08:32It also noted that the highlighted email exchanges occurred years ago.
08:37In a statement to Business Insider,
08:39Amazon said California is distorting four emails out of nearly one million.
08:44Those four examples were included in the state's injunction request.
08:47But there are more than 10 other companies named in the full case file,
08:52including Hanes, Scott's Miracle Grow, and Agrothrive.
08:58After the injunction was denied, A.G. Bonta's office said,
09:01we are disappointed in the court's ruling,
09:03but look forward to proving our case at trial.
09:06The newly unsealed emails largely concern vendors that sell products wholesale to Amazon.
09:12Third-party sellers say the same thing is happening to them.
09:15We talked to several business owners who use Amazon as a selling platform,
09:19including Jack Nicola and Mike Nusinkas, inventors of the bed scrunchie.
09:24So it attaches to the bed sheets first,
09:26and then you put the sheets on the bed as you normally would.
09:29And that's what makes the bed scrunchie amazing.
09:33Bed scrunchie is basically like a big draw cord and a belt for your bed sheets.
09:37It's a patented 360-degree draw cord for your sheets to keep them nice and tight,
09:40so you sleep right.
09:43At one point, Amazon accounted for around 90% of Jack and Mike's business,
09:48giving the platform enormous leverage over their decisions.
09:52I get anxiety typing in my product on Amazon now, you know that? It's crazy.
09:56Amazon sent us this very unfriendly email.
10:01One or more of your offers are not available to be featured in the buy box.
10:06Because they are not priced competitively compared to prices for those products from
10:10retailers outside of Amazon.
10:12So they're not saying they're going to take it off the platform,
10:15that they're saying they're basically going to sweep it under the rug so nobody will see it.
10:18It comes down to this one feature.
10:20If you've ever used Amazon before, you've likely seen the buy box.
10:24It's this panel that includes the add to cart and buy now buttons.
10:29Some estimates say 82% of all sales on Amazon go through the buy box.
10:33The FTC puts it closer to 98%.
10:37If you lose it, you can still technically sell on Amazon.
10:40But customers have to work harder to find you by scrolling down to
10:44other sellers for the non-featured offers.
10:47On Amazon's website, if they didn't get what they wanted,
10:49they would remove the product from the buyer's box.
10:51So it was a death knell for sales.
10:53When you can threaten to take away 50% of your livelihood overnight,
11:00then you have an enormous power.
11:04One business owner we spoke with, who makes children's toys and educational products,
11:08received these emails regularly.
11:10According to our account, Amazon sent him at least 24 in March, 2026.
11:16This email from April 1 listed six products that had lost their placement in the buy box.
11:22Another on May 27 flagged one more item.
11:26Two days later, he received a different email stating that one of his listings
11:30had been completely deactivated due to pricing errors.
11:33The fact that these threats do succeed is evidence that they have market power.
11:40Amazon doesn't reveal in the emails where it spotted the lower price,
11:43so it's up to the seller to figure that out.
11:46You're messaging these big partners, Target, Walmart,
11:49and you have to explain to them that the reason why you need them to adjust the price
11:52is so that Amazon, their competitor, is appeased.
11:56And that doesn't just apply to other retailers.
11:58It extends to their own website.
12:01You know, we're constantly trying to win over customers and run different promotions.
12:05And in the back of our mind, we really can't do that
12:08because we're always thinking about how will Amazon respond.
12:10It's always how will Amazon respond.
12:12When asked about the complaints from third-party sellers,
12:15Amazon told us that it doesn't prominently feature prices
12:18that could disappoint customers.
12:20There is a seemingly obvious solution.
12:23Why not simply lower the Amazon price?
12:25All the sellers we spoke with said that's not an option.
12:28If you end up lowering the price on Amazon to match the other lowest prices
12:33because the fees are so much higher on Amazon than other places,
12:37you'd end up making no money.
12:40Remember that chart from before?
12:42Many of those services charge sellers additional fees,
12:45making selling on Amazon more expensive than at other retailers.
12:49Take advertising.
12:50When we first started there in the past, there was no such thing as Amazon ads.
12:54Jack and Mike told us it's hard for products to get seen if you're not paying for Amazon ads.
12:59There's Amazon customer service, and there's fulfillment by Amazon,
13:03which can make products eligible for prime two-day shipping.
13:06Then there's warehousing fees.
13:08Fees if you have too much inventory.
13:10Fees for having too little inventory.
13:12They hold your inventory hostage, basically, in order to control you.
13:16Your inventory's trapped.
13:18Your money's trapped.
13:18Your entire livelihood can be wiped out faster than you can blink.
13:23It's just like a crippling level of fees.
13:26And sellers don't really have any options because Amazon captures so much of the traffic.
13:31So even though the Betts Crunchy sells for $50...
13:34I'm seeing less than $6 in my pocket after everything said and done with.
13:39Another business owner we spoke to, who sells pajamas,
13:42calculated that he could offer his items on other sites for about 20% less,
13:47but he can't afford to cut the prices on Amazon.
13:50On January 12, 2026, he received an email flagging items that were available at a lower price.
13:55It said that one of his products selling on Amazon for $29.99 was listed elsewhere for $29.98.
14:03One cent was enough to get Amazon's attention.
14:06Between fees and pricing restrictions, some businesses want to move more of their operations off Amazon.
14:13The problem is getting customers to follow.
14:16People can tell you, well, why can't you just simply sell somewhere else?
14:20Well, that's not an option because 90% of the revenue was on Amazon.
14:23If you're receiving 10 or 20 packages a month to your house,
14:27think about what percentage of those are from Amazon.
14:29They've just made it so darn easy for everybody to buy everything.
14:32I mean, to put into perspective how much power Amazon has,
14:35despite everything that I've been saying here, I still shop on Amazon.
14:40Amazon did not respond to our questions about its fees, how its algorithms work,
14:44or complaints from third-party sellers that the company pressures them to change their prices.
14:49The question is, what happens over the long term if smaller businesses and other retailers can't compete?
14:56What Amazon is doing to keep the prices low for consumers might be good,
15:01but if this is at the cost of destroying innovation and variety and et cetera, et cetera, this is very
15:08costly.
15:09This isn't the first time regulators have examined how Amazon influences prices beyond its own marketplace.
15:14Amazon once explicitly required sellers to maintain price parity, meaning they couldn't offer the same product for less somewhere else.
15:22The company removed that requirement from its U.S. seller agreement in 2019 amid growing antitrust scrutiny.
15:28Today, Amazon Marketplace's fair pricing policy states that the company can take action against
15:35pricing practices that harm customer trust.
15:38That can mean removing the featured offer or, in more serious cases, suspending a seller's privileges altogether.
15:45It's almost like a kind of governing power that Amazon has.
15:49That level of influence is part of what sets today's dominant platforms apart from the corporate giants of the past.
15:56In the history of America, we had a lot of big companies with a lot of political power,
16:01but I think we never had an entity that was able to integrate all these dimensions into one organization.
16:11Critics say it creates an uneven dynamic in which Amazon sets the rules
16:15and sellers decide whether they can afford not to follow them.
16:18There's no escape.
16:19There's no way out.
16:20And I know many people have families and this is their sole income.
16:25So you don't play around with these things.
16:28You just do it.
16:28When you are fearful of saying anything because your livelihood is at risk,
16:34that is, to me, not just an economic issue.
16:36It's a freedom issue.
16:38Whether Amazon crossed the line from aggressive competition to illegal price fixing will ultimately be decided in court.
16:45The California trial is scheduled for January 2027.
16:48Bonta says his office is confident that it has the evidence to win.
16:52These are not one-offs or exceptions.
16:55These are the rule.
16:56They are the design.
16:58Amazon said that it puts downward pressure on prices.
17:01And what California wants would prevent the company from negotiating with its vendors to lower prices.
17:07So what does Bonta say a victory would look like?
17:09Changing their patterns and practices, changing their business model, essentially ending price fixing.
17:17That's critical because so many people rely on Amazon for the products that they use on a daily basis.
17:23But that's not enough.
17:24It's necessary but not sufficient.
17:26They also need to pay appropriate damages and penalties as the law provides for.
17:31And we will seek those as well.
17:33In other words, California is not trying to stop Amazon from having the lowest price.
17:38It just wants Amazon to have to compete for it.