Nearly $70 Billion Advertising Business: Amazon Potentially Threatened by Meta’s AI Shopping Assistant Muse Testing E-Commerce!

Nearly $70 billion in advertising business faces a potential threat at Amazon. Muse, the new artificial intelligence shopping assistant from Meta Platforms, is emerging as a challenger that could also put pressure on Amazon’s dominance in online shopping.

Since Meta launched Muse in September, consumers have been able to assign AI agents to research and purchase products, book travel and manage budgets. Within the first six weeks of launch, more than 10 million users in the United States and Canada had created Muse agents, Meta said. Investors face implications beyond competition for retail sales. Sponsored product placements account for much of Amazon’s advertising business by shaping purchasing decisions as consumers browse its platform. Independent price comparisons and product selection by AI agents could reduce the effectiveness of these advertisements. That could weaken one of Amazon’s most profitable revenue sources.

As this trend develops, purchases through Muse have been blocked on Amazon’s platform, with Amazon citing security concerns. Walmart and Shopify are pursuing the reverse strategy through partnerships with Meta to support AI-driven shopping.

The immediate competitive risk was played down by Amazon CEO Andy Jassy on an earnings call. In his view, third-party shopping agents still offer less convenience than purchases made directly from retailers. He said there had not yet been a material impact on Amazon’s advertising business. Jassy also drew attention to Alexa for Shopping, Amazon’s own assistant. More than 400 million users have used it over the past year, he said, for features including product comparisons, price monitoring and personalised recommendations.

The longer-term risk, industry observers warn, is that AI agents could diminish Amazon’s longstanding position as the place consumers prefer to begin shopping online. JPMorgan sees the potential for Muse to develop into a major consumer AI platform. It also believes emerging competitors could find opportunities in Amazon’s restrictions.

To develop its own agent-driven commerce capabilities, Amazon is advancing services including Shop Direct and Buy For Me. Shop Direct now encompasses more than 250 million products from external merchants. With Buy For Me, customers can purchase selected third-party products without exiting Amazon’s platform. Changing shopping habits may still leave Amazon with significant competitive advantages, supported by its extensive fulfilment infrastructure, customer relationships and delivery capabilities.

Market Insight: Balancing Retail and Advertising
External AI agents may eventually become partners for Amazon, potentially helping the company sustain its dominance in retail. The trade-off would remain: adopting new shopping technologies while safeguarding advertising revenue. Much of that revenue depends on consumers remaining within Amazon’s ecosystem.