Turning Public Money into Amazon’s Profits

Institute for Local Self Reliance:  The Hidden Cost of Ceding Government Procurement to a Monopoly Gatekeeper – ILSR has conducted a sweeping investigation that reveals Amazon has quietly become a major force 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. Full Report  Executive Summary  Guide to Local Action – Amazon has quietly captured a growing share of government purchasing. We estimate that cities, counties, and school districts spent $2.2 billion with Amazon in 2023 — a nearly fourfold increase since 2016. Through its Amazon Business platform, the company has maneuvered to become the default source for office products, classroom materials, cleaning supplies, and other routine goods. Today, it is embedded in most local governments, making inroads into state agencies, and dominating a new program designed to reshape how federal agencies buy commercial products. Through a close investigation of spending data, pricing, and contract terms, we find that Amazon has driven up costs for governments, eliminated transparency, and eroded competition by pushing out better-performing, more accountable independent suppliers. The disappearance of these small and mid-sized businesses weakens local economies and tax bases. And it leaves governments increasingly dependent on Amazon, paving the way for the kind of monopoly control that ensures higher prices, poorer service, and less innovation. Our findings should deeply alarm elected officials and the public. Amazon is radically reconfiguring procurement, exposing public dollars to waste and risk. The company has convinced cities, schools, and other agencies to abandon long-standing safeguards designed to ensure fair prices and public oversight. It has done this by persuading officials that its platform invariably offers the best deal, despite strong evidence to the contrary. Our findings draw on spending data from 128 local governments — including cities, counties, and school districts serving 51 million people — and 122 state agencies, along with contract documents and interviews with dozens of public officials, procurement experts, and vendors.