AI Assistants Could Break Amazon's $60 Billion Retail Media Business, Warns VC: 'It's Not Just Search At Google — It's Search Everywhere' - Amazon.com (NASDAQ:AMZN), Maplebear (NASDAQ:CART)

As AI assistants reshape how consumers search, shop and interact online, they stand to fundamentally disrupt Amazon’s lucrative retail media business, according to venture capitalist Joe Marchese.

Check out the current price of AMZN stock here.

What Happened: Speaking on the Risk Reversal podcast on Sunday, Marchese discussed the growing threats to retail media since the advent of ChatGPT and other similar tools.

Explaining the role of advertising and media in supporting online commerce, Marchese spoke about the dynamics of search and sponsored placements, and how that is “pure profit” for companies such as Amazon.com Inc. AMZN, which is expected to generate $60 billion in revenue through this medium in 2025, according to research firm WARC Media.

This, however, is changing with the rise of ChatGPT and other AI assistants, since users no longer have to go through traditional search before making any purchase decisions.

“That doesn’t exist in a world where I just ask ChatGPT, ‘What are the best batteries to get? Okay, buy me those batteries,'” Marchese says.

Marchese warns that this disruption goes well beyond just Amazon and Google's search ads. “It's not just search at Google, it’s search everywhere,” he said.

Platforms such as DoorDash Inc. DASH, Uber Technologies Inc. UBER, Walmart Inc. WMT and Instacart CART, with their up-and-coming retail media businesses, are just as vulnerable, according to Marchese.

“Every business that you think about,” he says, if they have an advertising business, which is a driver of profitability, then the extent to which it relies on people searching will determine just how much of a disruptor AI will be, since search doesn’t exist in the world of ChatGPT.

Why It Matters: More than a month ago, the CEO of Perplexity AI, Aravind Srinivas, said the same thing: “this is the first time in two decades that Google is extremely vulnerable,” citing its ultra-high-margin search advertising business as a strategic liability in the ongoing AI arms race.

While AI is quickly emerging as a disruptor for one of Amazon’s most lucrative businesses, the company is successfully leveraging it to drive value for advertisers, consumers and investors alike.

Recently, the company’s CEO, Andy Jassy, said that its AI offerings are currently being used by over 50,000 advertisers to plan, launch and optimize their campaigns on the platform.

Price Action: Shares of Amazon were up 1.59% on Thursday, trading at $223.41, and are down 0.34% after hours.

According to Benzinga’s Edge Stock Rankings, Amazon ranks well on Growth, and has a favorable price trend in the short, medium and long terms. Click here for deeper insights into the stock.

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