Amazon’s Nearly $70 Billion Advertising Business Faces a Potential Threat as Meta’s AI Shopping Assistant Muse Explores E-Commerce!

With nearly $70 billion in advertising business and a dominant position in online shopping, Amazon faces a potential challenge from Muse, the new artificial intelligence shopping assistant developed by Meta Platforms.

More than 10 million users in the United States and Canada created Muse agents during the first six weeks after its September launch, Meta said. The service lets consumers use AI agents to research and buy products, as well as manage budgets and book travel. The competitive implications for investors reach beyond retail sales: Amazon depends heavily on sponsored product placements to generate advertising revenue by influencing consumers browsing its platform. Should AI agents compare prices and choose products independently, those adverts could prove less effective, potentially putting pressure on one of Amazon’s most profitable revenue streams.

Security concerns are Amazon’s stated reason for blocking Muse from completing purchases on its platform as this trend develops. Walmart and Shopify, however, have opted to work with Meta, forming partnerships to embrace AI-driven shopping.

Speaking on an earnings call, Amazon CEO Andy Jassy argued that buying directly from retailers remained more convenient than using third-party shopping agents, playing down the immediate competitive threat. No material effect on Amazon’s advertising business had yet emerged, he said. As for Amazon’s own Alexa for Shopping, Jassy said it had attracted more than 400 million users over the past year. He noted that the assistant enables consumers to compare products, keep track of prices and receive personalised recommendations.

Amazon’s established role as the preferred starting point for consumers shopping online could nonetheless be weakened by AI agents, industry observers warn. For JPMorgan, Muse could become a major consumer AI platform; the firm also believes Amazon’s restrictions could give emerging competitors opportunities.

Development of Amazon’s own agent-driven commerce capabilities is continuing. More than 250 million products from external merchants now fall within its Shop Direct service, and customers can use Buy For Me to purchase selected third-party products while remaining on Amazon’s platform. As the company adjusts to shifts in shopping habits, its broad fulfilment infrastructure, relationships with customers and delivery capabilities could continue to offer substantial competitive advantages.

Market Insight: Amazon Faces an Advertising Trade-Off
Working with external AI agents may eventually become part of Amazon’s strategy. Although such partnerships could support its continued dominance in retail, adopting new shopping technologies will still have to be balanced against safeguarding advertising revenue. That revenue remains heavily dependent on consumers staying within Amazon’s ecosystem.