Amazon R.I.P.?

Bill Gates thinks so

With the advent of AI, the Internet as we know it is doomed. Just ask Alphabet, owners of the Google search engine.

The internet behemoth accounts for 80 percent of the current global search market. Ad services dump some $224.47b into their corporate coffers. As I reported in Google is Dead! Long Live Google!, the company is busy modifying its search page to defend their turf against AI. By adding AI. It won’t work.

AI obliterates the need to Google for information. Want to know how to cook salmon? No way you’re going to use Google over Chat GPT, Bard or any another AI app. At the same time, it’s only a matter of time before AI becomes an advertising medium. Oh wait. It already is!

Clearly, Bard is a better place for Central Market ads than Google, which provides far too much information. Too much choice. Less is more! More money for AI than you can possibly imagine. But Google can, and they’re scared shitless.

For good reason. The search engine giant depends on a huge volume of advertising to survive. As you can see from the limited links above, AI decimates Google’s revenue model.

Actually, it’s worse than that. AI is a personal assistant. It will soon refer users to businesses and services depending on the user’s financial and practical needs, and personal preferences.

You’ll no longer search in the traditional sense. AI’s “personal agent” will go out into the internetosphere and filter/limit results for you.

Google isn’t the only one looking at a diminished future. AI also has a huge chunk of Amazon’s business firmly in its crosshairs. fool.com sounds the alarm:

Amazon has more to lose here than what many people might realize. E-commerce marketplaces also place ads -- this is known as retail media. According to third-party advertising insights company MediaRadar, Amazon attracted 37% of investments in retail media in 2022. It's clearly the place that advertisers want to be, due to its prominence. For perspective, Amazon has generated $39.3 billion in advertising revenue in just the last year and this revenue source grew at a 23% year-over-year pace in the most recent quarter. This is a big and fast-growing part of the business. And if we trust Gates' intuition, it could be in jeopardy.

Back in May, the Epstein-accompanying exec rang the alarm bells for Jeff Bezos’ baby. "Whoever wins the personal agent, that's the big thing,” Mr Gates opined. “You will never go to a search site again, you will never go to a productivity site, you'll never go to Amazon again."

To be clear, Amazon’s core business – selling you stuff – isn’t facing an extinction level event. People trust Amazon (thank you returns policy) to deliver the goods. A brand with that much good will will live on for decades.

Nevertheless, AI opens the door for direct sales, cutting Amazon out of the loop. Here’s what happened when I asked Bard for a recommendation for a custom locking folder knife.

Once AI knows my preferences, it will get more specific. I’m not sure makers of utilitarian products (e.g., Tide laundry detergent) will get the same hat tip, but they could. Leaving Amazon in the fulfillment business. Which is HUGE, but $40b in threatened Amazon ad revenue ain’t chicken feed.

Google’s search engine algorithm – determining where they place companies that don’t pay them – is a closely guarded secret. How AI decides on a referral is even more obtuse (perhaps even to its makers). Meanwhile, Chat GPT is making bank on a subscription model ($20 a month). Look for them to add advertising to their “free” service.

Question: if AI goes down the ad-supported route, how can anyone trust the AI personal assistant to act in the user’s best interest, as opposed to the advertisers’?

Perhaps AI will monitor customer satisfaction and adjust accordingly. Or maybe AI apps will be like Google, bank billions and not give a flying fuck. Watch this space.