NEW REPORT: Amazon’s Capture of Local Government Purchasing Is Driving Up Public Costs and Eliminating Competition
December 4, 2025 | Press Releases
A sweeping new investigation by the Institute for Local Self-Reliance (ILSR) reveals that Amazon has quietly become a controlling presence in how cities, counties, and school districts purchase basic supplies — and that its tightening grip is driving up costs, eroding competition, and harming local economies.
Drawing on purchasing records from 128 cities, counties, and school districts serving 51 million Americans, the report — Turning Public Money into Amazon’s Profits: The Hidden Cost of Ceding Government Procurement to a Monopoly Gatekeeper — exposes how Amazon has used its market power, political influence, and opaque pricing algorithms to insert itself into public purchasing systems with little transparency or oversight.
“Public officials should be deeply concerned by what we found,” said Stacy Mitchell, co-executive director of ILSR. “Amazon is reshaping public procurement in ways that expose taxpayer dollars to waste and risk. It has persuaded cities and schools to abandon safeguards meant to ensure fair prices and accountability — while driving out independent suppliers, eroding competition, and putting Amazon in a position to dictate terms.”
Key Findings:
Local governments spent an estimated $2.2 billion with Amazon Business in 2023, nearly four times the amount they spent in 2016 (inflation-adjusted). School districts account for about 70 percent of this spending.
Amazon’s group purchasing contracts mislead governments into thinking they’re getting vetted, competitively bid agreements. In reality, these contracts sidestep competitive bidding and explicitly permit dynamic pricing, while driving higher spending: School districts that adopted them spent twice as much per student with Amazon as those that did not.
Amazon’s dynamic pricing inflates public costs. Unlike traditional government contracts that rely on fixed prices, Amazon subjects agencies to constantly fluctuating algorithmic pricing. On May 30, 2023, Amazon charged Boulder, Colorado, $8.99 for a 12-pack of Sharpie markers, while charging Denver Public Schools $28.63 for the identical product on the same day. Across the 100 most frequently ordered products, the highest prices were on average 136% higher than the lowest. Overall, had governments consistently received Amazon’s lowest prices, they would have saved at least 17% on routine supplies.
Independent suppliers beat Amazon on price and service — and keep public dollars local. In a direct comparison of 628 office and classroom products frequently purchased by public agencies, ILSR found that an independent dealer was cheaper on 68 percent of the items. Independent suppliers also offer faster delivery and better service, and far greater support for local tax bases.
Amazon’s dominance is eroding competition, putting local governments at risk of becoming captive to Amazon’s pricing and terms. Over the last decade, the number of independent suppliers of office and janitorial products has fallen from 1,300 to 900, with Amazon cited as the major cause of the decline.
Model Communities and Policies Offer an Alternative Path
The report highlights local governments that have successfully avoided becoming ensnared by Amazon’s extractive contracts and false promises. Tempe, Ariz., cut Amazon spending by 84 percent after a local bookstore owner urged officials to support local businesses. Phoenix has spent almost nothing with Amazon for over a decade by prioritizing local suppliers.
“These communities show that Amazon’s dominance is not inevitable,” said Kennedy Smith, co-author of the report. “When local officials put real safeguards in place and prioritize local suppliers, they save money, strengthen their economies, and restore public control over public dollars.”
The report calls on governments to cancel Amazon contracts lacking fixed prices and other key safeguards, restore competitive bidding, ban dynamic pricing in procurement, and prioritize local businesses, among other recommendations. At the federal level, it proposes diversifying the online platforms participating in a federal procurement program and capping how much they can charge small businesses in seller fees.
The full report with detailed data and recommendations is available at ILSR.org.