Amazon vs. Perplexity Legal Showdown | Fast Five Shorts

Amazon is suing Perplexity over its Agentic shopping tool.

Wow, okay.

That's the response.

According to Reuters, Amazon sued Perplexity AI last Tuesday over the startup's Agentix shopping feature, which uses automation to place orders for users, saying it covertly covertly accessed Amazon customer accounts and disguised automated activity as human browsing.

In the complaint, Amazon accused Perplexity's Comet AI agent of degrading customers shopping experiences and interfering with its ability to ensure customers who use the agent benefit from the tailored shopping experience Amazon curated over decades.

Based on what Wakas said, I'm curious what he thinks about Amazon's quality of curation.

Third party apps making purchases for users should operate openly and respect businesses decisions on whether to participate, Amazon said in a statement.

Wakas, is Amazon taking the right approach in suing Perplexity and attempting to thwart unauthorized bots from scraping its site?

So I think this is, this is just the first salvo in a long series of legal and otherwise challenges that I think that are bound to come up.

I think if you look at Perplexity's answer to this, I think it sheds some light on their point of view.

But I do believe that new technologies, when they come in, they do push the limits.

Perplexity has faced some challenges from the likes of Cloud Flare in a prior lawsuit, but the idea really is that, you know, the, the engagement model of the consumer is changing.

Now Amazon on the other side, exactly as we said earlier, I think, and you were saying that Amazon has a Rufus, you know, of, you know, agent of its own.

Now my agent goes to talk to your agent and then, you know, the agents get together and figure this thing out.

There are, it's a very cluttered space.

You want the customer to have as seamless an experience as possible.

Right now it's full of friction.

You have to think of advertising.

So there is, you know, you click on an ad and you have to go to the advertiser's website and then place another order.

If you don't have a profile set up, it's a mess.

Now for Amazon, it's actually a problem in multiple ways.

One is they've certainly developed a very large multibillion dollar ad business and that ad business relies on them to be able to sort of, you know, provide you recommendations and offer you certain products at a certain placement.

It's just like shelf placement, right?

So this directly threatens that business.

And I can understand that they're trying to make sure that it's done on their terms.

On the other side, what you'll also see is that there is a multitude of protocols out there.

OpenAI has its own protocol.

Google has its own shopping protocol.

There is shopping protocols from Visa, from MasterCard.

There are so many of these protocols out there that you don't know how to interact.

So even as a retailer, it's a mess for you to manage.

What kind of MCP server do you install?

How do you navigate all this?

Do you keep updating your software all the time to accommodate every new protocol that comes out?

So it's a difficult space to operate.

I think Amazon's position is a bit defensive, to be honest.

If I'm a consumer, an agent that I use is representing me.

If I give the agent the right authorizations, the right passwords and everything else, I would expect that agent to go and purchase on my behalf.

I can have five things open on my website.

Amazon has had some challenges where sellers who are selling on Amazon got sort of replicated through a product that Amazon put out that looked very similar and felt very similar to them.

So even, even sellers have had some mixed experiences in the past.

So this is a messy space.

I think eventually this will settle down.

I think there will be some agreement that will be, that will be reached between the entities.

For now, Perplexity is taking a very hard position.

They've used words like Amazon is bullying us.

They've used some challenging wor there.

So I think it's a, it's a, it's a start of a long, long exchange that we can expect.

I, I would imagine that, that, that, you know, there are, there are saner minds on the other side who are trying to get to an agreement, but I think it's a discussion of protocols.

I think it'll get settled, but it will be messy until it gets settled.

Yeah, it's interesting, Interesting.

And as I think about this, I'm going to go to you next and I'm guessing what cost.

You're going to want to come back in too, after I say what I'm about to say.

But I think what I, what boils down to we didn't even talk about the advertising, the first headline.

Right.

The advertisers are going to want to go where they're converting the highest.

Right.

And so that's a big play here.

And the term that I use that I keep coming back to is first product search.

That's what's, that's what the battle is here for.

Right.

Ultimately, it's like who gets that first search from the consumer?

And Amazon has always gotten that and now OpenAI is going after that.

So.

So the question I have for you, Kelly, is kind of, you know, if you look at the approach Amazon is actually taking here, it's kind of funny because it feels like they're now back in 1990, playing the role of the incumbent retailer who now has the threat of E commerce and they have to decide what to do.

So they can, they can, they're.

And they're trying, they're trying to fight the change that's coming and trying to flex their power legally to stop it.

And so you start to play this out.

Who stands to lose the most from this activity?

It's 100%.

It's Amazon.

It's search has never been the bread and butter of Walmart.

They've just plugged into OpenAI and ChatGPT.

They've always been third banana, but they sell all the same stuff Walmart does.

So for them there's no loss to doing that.

And all it does is hurt the first product search business of Amazon.

So if I'm Amazon, I can see the rationale of trying to dig in and fight.

But I don't like how this story concludes because I think you're just trying to push water uphill.

But Kelly, what do you think about that?

That's a great point, Chris.

You know, they have, they have a lot to lose in this in the end.

Like if they end up winning this fight, it's, it's going to push back the progress that they're making on search and slow down that innovation engine, which honestly has been their bread and butter for so long.

So when competitors enter the space, it often has inspired them to do more and grow.

And if they're going to slow that down, I don't think it's going to work out in their favor.

Yeah, right.

Okay.

All right, so there's something, there's something there.

What cost?

What do you think?

Yeah, I mean, I think, you know, this is the, you know, you said it like it's a classic technology, new technology disruption that's happening here.

And Amazon in this case is, is the incumbent.

So, so I think the, the answer really is that at some point this will, I mean, the consumer demand is just not going to stop.

They will, they will vote with their feet and clicks and eventually they will see that it's going to be a challenge for them.

So I think this seems like a knee jerk reaction or it may be a negotiation position so they want to come to a settlement.

And so, you know, many years ago I was negotiating with a software company, and they came to us with $100 million lawsuit to start the negotiation.

So you can see that sometimes these actions are taken just to set it up as a play to come to a settlement that brings both parties together.

Even the perplexity CEO statement, although he starts a bit provocatively, but he ends the statement with a bit more conciliatory note that we want to talk and let's come to an agreement.

I think that's where this will head.

Yeah.

And let's also not forget that Amazon is invested in one of the big competitors, which is Anthropic too.

And so if Anthropic can take over, then they still win or protect themselves in here, but yet shut out their competition from giving them access to the biggest e commerce marketplace, in particular the United States.

And what do you think here, final word?

I think that's the, the anthropic point is a really good one, Chris.

And I think when I heard this headline, I think the, the lawsuit is a temporary stop, stopgap for Amazon.

And what I would really be focused on if I was Amazon is getting back.

Like Amazon has to go to day one.

Their famous saying, like, how are you going to rethink the challenges that are upon you with these new behaviors?

Consumers searching using these agents.

And if I were Amazon, I would be looking at pushing by, with prime, with more agents, like, you know, that I'm a prime member.

So if you're serving me up content and you're saying I should buy this product and Amazon sells it, or you know, Nespresso sells it, push me to Amazon because I can get it in two, like two days or get it faster, get, you know, have free shipping.

Like there's, there's advantages that I think Amazon should be working on both from like an infrastructure perspective to make this simpler and to continue to push people to Amazon.

And the second thing I would say is what you know, Wayne Purbo and Julie Hallock, who were on the podcast just last week, were talking about, and I can see why Amazon is pushing shoppable video and helping provide content so that those Amazon products are showing up more frequently and more consistently with more data in those large language searches.

So that's where I'd be pushing the gas right now, not on, on lawsuits.

Because I think, like you guys have all said, I think you're, you're really, you're really fighting a battle of pushing water uphill and it's not gonna, it's not going back in the bottle.

So, so yeah, I think I think that's where my approach would be if I was Amazon right now.