Last week, Amazon and Perplexity had a major falling out when the e-commerce giant sent a sharply worded legal demand letter to the AI company, demanding changes in the way Perplexity’s shopping agent works.
The background story is that Perplexity has a function in its Comet AI browser that allows an AI “agent” to shop on Amazon, for example, on behalf of the user. The idea is that the user tells the agent to buy a bag of cat food, and the bot goes to Amazon on its own and places the order.
Amazon doesn’t like that process. The demand letter it sent to Perplexity aims to make the Comet agent identify itself as an AI agent, and not look like any other user to Amazon. This is a lack of transparency, Amazon argued. But what it really comes down to is that Amazon wants to be able to block the Comet agent and similar bots outright, in the same way media and other content owners want to be able to block AI bots from scraping their content.
The tone between the two companiesquickly became shrill. After the letter arrived, Perplexity accused Amazon of “bullying” and being anti-innovation. “Amazon just wants to sell advertising, and sell its customers unnecessary goods,” Perplexity said in a blog post.
And…that’s the real issue here. I’ve written before that AI agents, to the extent they work as promised, will reshape the entire digital economy. That’s true for the e-commerce market in general — and Amazon in particular. Call this the first battle in the War of the Agents.
After all, Amazon’s business idea is to drive revenue through its own platform and its own customer relationships. Part of that revenue comes from ads, which people don’t really think about. But Amazon has sold more than $600 billion worth of ads in the last year, including things like companies paying to get their products more visible in Amazon’s own search results and recommendations.
But beyond that, of course, upselling is incredibly important to Amazon. You constantly get recommendations related to your previous purchases, offers that fit your purchase history, and the ability to easily buy something you bought before again. And, of course, you get offers to pay for the premium service Prime.
All of this goes away if it’s an anonymous “AI agent” that pops onto Amazon, buys a specific item, and leaves. No ad exposure, no customer relationship, no additional sales. That Amazon would be against this seems like the most obvious thing in the world.
Amazon’s sheer size makes it extra important to follow the dispute, but the same is true for all other e-retailers as well. I don’t know of a single store I shop from that doesn’t sprinkle offers, “you haven’t forgotten” suggestions and customer club discounts.
I’ve heard Swedish e-retailers talk with some enthusiasm that shopping agents and purchase recommendations in, for example, Chat GPT will be able to send completely new visitors to their stores, in the same way that many today depend on customers finding them via Google.
But then it’s still about human visitors who come into the store, look around and make one or more purchases. When the visitor — the “customer” — is an AI agent, it will pull the rug out from under a significant part of the store.
How big this problem will become depends partly on the AI companies and partly on the users. The AI companies will, of course, have to respect if a platform or store doesn’t want their agents as visitors — or at least make some kind of revenue deal. (Perplexity is bad at this kind of thing and has previously been caught reading articles behind newspaper paywalls without paying for them.)
What about the users? Perplexity is adamant that this is what users want, that it’s a “natural evolution” of the demand that made Amazon so big.
I’m not so sure. Call me old-fashioned, but I appreciate a good shopping experience, where I can search and compare for myself, get good deals and collect bonuses for my loyalty. I’m happy to have a relationship with a company for whom I’m a customer, if it gives me benefits in terms of security, choice and discounts. I wouldn’t give my debit card to even to a chatbot (notoriously unreliable) to buy even a box of dog poop bags.
But, maybe others are not like me. Maybe that’s what most users want — for the AI agents to take over both the debit card and the home clicking. If that’s the case, it will have very big consequences. Or as McKinsey calls it, “opportunities.”
This column is taken from CS Weekly, a personalized newsletter with reading tips, link tips and analysis sent directly from editor-in-chief Marcus Jerräng’s desk. If you would you like to receive the newsletter on Fridays, sign up for a free subscription here.
