Welcome to the age of surveillance pricing – a new form of digital price gouging where Amazon and other online platforms use the massive amount of data they collect on every click, search, and purchase to weaponize sales and to maximize profit through predictive modeling.
While relatively unknown to the general public, the Federal Trade Commission and a coalition of states filed a landmark antitrust lawsuit in 2023 against Amazon alleging the company used a secret algorithm, code-named Project Nessie between 2015 and 2019 to raise prices on and off the platform by predicting whether other online stores would follow an Amazon price hike, the FTC said.
The case is ongoing but should send a clear message to state attorneys general and lawmakers that as Washington debates the scope of Big Tech regulation, states can – and should – also protect consumers from data-driven price gouging that worsens the affordability crisis families already feel every day.
And in the middle of a national affordability crisis, that’s no small thing. Grocery bills and housing costs are up. Families budget every purchase. When powerful companies use surveillance data to quietly raise prices, they’re not just exploiting consumer data, they’re eroding household budgets. Surveillance pricing doesn’t just reflect inflation; it amplifies it.
Dynamic pricing has long existed — from airline tickets to ride-share fares. But surveillance pricing takes it to a darker place: using the power of mass data collection and algorithmic inference to turn personal information into profit. Amazon’s enormous influence means it sets the standard for the rest of the digital economy. If left unchecked, the same practices could spread — from retail and travel to healthcare and insurance — creating a future where prices aren’t set by free markets, but by the maximum a company thinks you will pay based on your consumer behavior.
The FTC has already warned that algorithmic pricing tools “may lead to discriminatory outcomes, privacy violations, or algorithmic collusion,” enabling companies to predict how much each consumer is willing to pay. Economists at the National Bureau of Economic Research have found that these tools raise prices even in competitive markets. That’s not innovation — it’s extraction, powered by surveillance.
Amazon insists its pricing algorithms help customers find value. But value for whom? When a company can use your past purchases, browsing patterns, or even location to decide how much to charge, affordability becomes a moving target, and one that moves away from low-income shoppers first.
That’s why states can’t afford to wait for Washington to act. Lawmakers already have tools to curb surveillance pricing: they can require transparency from online retailers about how algorithms influence pricing, prohibit the use of personal data in price-setting, and strengthen consumer privacy laws to prevent data from being used to drive up costs.
Connecticut is the first state to act, passing a law that requires companies to disclose when they use algorithms to personalize prices and limits the data they can rely on. California and Colorado also introduced bills aimed at restricting algorithmic pricing and the use of surveillance data, but neither ultimately passed. With more states proposing similar measures, it’s clear that protecting consumers from surveillance pricing is a priority, and that more must step up before the problem gets worse.
Consumers are told that technology makes things cheaper, faster, and fairer. But when data is used to make life more expensive for those who can least afford it, the balance has tipped too far. The question isn’t whether companies like Amazon can use surveillance to personalize prices — it’s whether states will step in before every digital interaction becomes a price increase.
