04/21/2026
In 2023, the Federal Trade Commission, then led by Joe Biden appointee Lina Khan, along with 17 states, filed an antitrust lawsuit against Amazon. The case, which is scheduled to go to trial next year, alleges that Amazon maintains a monopoly in online retail through an interlocking set of tactics—what the complaint calls “a self-reinforcing cycle of dominance”—that thwart competitors and entrench its grip on the market.
Central to Amazon’s monopoly power, the complaint alleges, are sophisticated AI-driven pricing systems that draw on torrents of real-time data and “can detect any price change virtually anywhere on the internet.”
“Amazon has used these algorithms not only to adjust its own prices in real time, but to monitor how competing retailers’ algorithms react, probe their strategies, and learn how to shape their behavior—including how to induce them to raise their prices,” writes Stacy Mitchell, co-executive director of the Institute for Local Self-Reliance.
In the suit, the FTC singled out what it calls Amazon’s ‘anti-discounting’ algorithm, which allegedly worked by immediately matching competitors’ price changes to the penny. When a rival offered a discount, Amazon matched it; when rivals raised prices, Amazon’s algorithm followed. “This denied competing retailers a crucial tactic for luring customers from Amazon,” Mitchell continues. “If other retailers could never offer lower prices, Amazon’s roughly 200 million paying subscribers had little reason to shop elsewhere.”
More insidiously, the lawsuit contends, this strategy rewired how rivals price their products. It taught online retailers’ algorithms that price cuts yielded only thinner margins, not higher sales. Competitors’ algorithms eventually gave up on discounting and instead concluded that raising prices was a more profitable response. In turn, Amazon matched competitors’ price hikes, and prices across markets rose without any direct coordination.
“These allegations point to a novel form of monopoly power: the ability of a dominant platform to use algorithms to lift prices across an entire market,” Mitchell writes.
https://washingtonmonthly.com/2026/04/20/how-amazons-ai-algorithms-raise-the-prices-you-pay/
