Amazon Just Blocked AI Shopping. Shopify Opened Up | The Brainstorm 150

Brett (0:00)

Think about Amazon.

Nick (0:01)

I think what they're really protecting is the ad business. That $70 billion is extremely profitable for them. And if it's agents that are crawling your site, then the ads are meaningless, right? There's no point to them.

Sam (0:13)

Welcome to The Brainstorm.

Amazon cutting off Muse, and then Shopify building its relationship. Nick, what is happening here as people start to ally up in the AI arms race?

Nick (0:29)

Yeah, maybe a better name is the AI shopping wars, because you have, as you pointed out, Amazon is blocking off Muse. Muse was spinning up in the virtual machine for a lot of people over the weekend and probably purchasing different items on individuals' behalf. And Amazon said, no, you cannot do this.

We want to own the customer relationship. We have a $70 billion ad business to protect. We can't have agents crawling all over our site. We need to think about this more thoroughly. Then you had Shopify yesterday come out and say, hey, we're going to open up. We're going to allow Shop Pay to be natively integrated into Muse. And then we'll have Muse be able to index Shop Catalog, which is a product built specifically for agents. It allows the items to be better indexed for the agent. So when you ask a question, Shopify has a backend integration where the agent can find the different details of the item to be able to present a better search result.

So you have two different approaches to how shopping will take place in the agentic age. I think Amazon is bound to have to do an about face here. I don't think they're anywhere close to being able to release their own native AI agent into the market.

They obviously have Alexa.

Brett (1:53)

I already use Alexa.

Nick (1:56)

I meant Beyond.

Brett (1:57)

Just the other day.

Nick (1:59)

So I guess maybe the better framing is. I think what you'll have happen is retailers such as Amazon, Walmart. Walmart has a product called Sparky. Amazon has Alexa. They live native on the marketplace. You're able to query them. It's very helpful if you have different questions about a product. It has better search functionality. It's shown to actually increase GMV across the platform. So it's demonstrating value for Amazon. Then you have this next layer, which is called the abstraction layer, which is where Muse, Grokbot, ChatGPT, all of the agents will live, which they are going to want to index across not just Amazon, but Walmart, Target, etc. to find you the best pricing, the best product, the fastest delivery time, whatever your criteria is for that specific item.

Amazon, Walmart, the largest retailers are incentivized not to let this happen, or maybe on face value, they're incentivized not to let this happen. I would actually argue they should open up because I think on the majority of products, they're going to win that bid nine times out of 10 The largest retailers can compete on price. They have the largest inventory to search against, and they can deliver the fastest.

The shipping speed is the fastest at Amazon, Walmart, etc. I think they're making a mistake by doing this. I think they should take the approach to Shopify. How they implement it though, I do think they need to be careful. They probably need to set up their own agent that works with our personal agents to then have better matching and allow us to run wild. I think is probably the wrong approach. I do think they'll eventually turn around and change their mind.

Sam (3:39)

That was my read on the whole thing, which is, it's like, okay, we just need this to not run wild on our site before we figure out how we want to actually integrate it.

I feel like there is a similar, Nikita Beer was mentioning this with respect to Muse and Facebook Marketplace. It's like one of the default asks you could have it do was negotiate for you on Facebook Marketplace. It's like the poor product manager on that product, who knows that product is going to die if every single person out there is now getting lobe balled by agents frictionlessly across the world. I feel like this is just a moment of figuring out the right way to integrate as opposed to a hard line in the sand.

Brett (4:30)

Well, philosophically, I agree with you, I think that it's the right like that Amazon is eventually going to have to let these things in and that kind of like Shopify's approach is probably the optimum one. And I don't think the reason they have to is because they would always win. I think that if you imagine, if you have AI agents able to browse Amazon selection, the first thing they're going to realize when they get powerful is that, well, this item on Amazon is available in China for much less. And I'm going to give the consumer the option to get the identical item, maybe unbranded, maybe branded, in a week as opposed to two days for whatever the markup is. And so it could really poison their third party business there, where they're taking margin. And I think that there's a... I listened to a podcast on the history of Walmart the other day. It was great. It's acquired.