I guess in strictly economic terms, price discrimination would go 'too far' when there is no consumer surplus. At the same time, this simply would mean that the consumer would lose the most money by buying the product - this does not mean price discrimination would be inherently unacceptable. The consumer could simply choose not to buy the product or actively attempt to find a cheaper alternative.
I may be misunderstanding something with your Amazon example but wouldn't that not necessarily be price discrimination if the more expensive items are shown to all demographics? Or would Amazon be selective with the demographics to whom shows more expensive and cheaper items, and if so how would it make that decision?
In the Amazon example, my assumption is that what they show you depends on the data Amazon has about you. If Amazon's data says you specifically are likely to have particularly high utility for a certain item, they'll intentionally show you overpriced listings. If data suggests your utility is more normal, they'll show you market rate listings.
For instance, Amazon could use their data to determine if something is a discretionary or necessary purchase for an individual. If amazon thinks a potential purchase is more necessary/urgent for an individual, the more likely Amazon would show them overpriced listings.
If Amazon's data thinks I am having a baby very very soon, it may intentionally show me overpriced baby toys, milk bottles, and diapers. I would be willing to spend more because these are things I need for my new baby ASAP. I may also be overwhelmed by other things and not really be thinking as much about cost.
However, if Amazon thinks I've had the baby for a few months and am just surfing for anything that looks fun or useful, it'll show me market rate baby toys and baby supplies. The lower prices may make me more likely to make an impulse purchase, especially since things seem relatively cheaper than when I bought stuff a few months ago.
I see, thank you for explaining. Either way, the question of 'when does price discrimination go too far' is one I probably need to think about more.
