Sundar Pichai (6:34)

Two things, though. First, there's a lot to unpack. It's a fascinating topic. The web is a series of databases, et cetera. We build a UI on top of it for all of us to consume.

Nilay Patel (6:44)

This is exactly what I wanted. Is the web is a series of databases?

Sundar Pichai (6:46)

It is, but I think I listened to the Demis Sergey conversation yesterday. I enjoyed it. I think he's saying, for an agent first web, like so, you know, for a web which is interacting with agents, you would, you would think about how to make that process more efficient.

Nilay Patel (7:03)

I'm just saying turning all these services into databases for agents might kill those services. And then what will the agents do? That's the doordash problem. So far, this hasn't really been a problem. These AI bots haven't been disrupting the flow of commerce between consumers and companies. And so they've all been content to let the AI companies experiment. In some cases, they've even announced integrations with AI chatbots, because why not? But as more and more people turn to AI first, and as more and more AI companies start making noise about agents, it's clear that this is going to be a real fight in the years to come. The thing I didn't expect is that it's starting with Amazon. We need to take a quick break. We'll be right back.

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Nilay Patel (8:47)

We're back discussing the doordash problem and how Amazon and Perplexity have kicked off the next great war in web browsers. Before the break, we were laying out exactly what the doordash problem is and why it's such a big deal. Now I really want to get into the details of the Amazon and Perplexity fight and how Amazon's position here stacks up against what I've heard from all the CEOs. I've been asking about the doordash problem all year long. If you haven't used Perplexity, the company arrived on the AI scene in late 2022, right after the launch of ChatGPT. Perplexity makes an AI search engine powered by a combination of its own models and existing models from OpenAI and others. The original pitch was as a kind of competitor to Google, and as of earlier this year, Perplexity now makes its own browser called Comet, which is built on Google's Chromium engine. But it's really a vehicle for Perplexity's AI agent. Perplexity promotes Comet as quote, the browser that works for you. And just like Microsoft Edge with built in Copilot, Chrome with increasing Gemini integrations, and now OpenAI's Atlas browser, it's an attempt to rethink how we use the web, or rather how we direct AI to use the web on our behalf. And because people do so much shopping on the web, Perplexity built a shopping agent that can automate browsing and buying on Amazon, which notably is in violation of Amazon's terms of service. According to Amazon's complaint, Perplexity ignored several requests to disable this functionality and instead began masking its AI agents as human Chrome users. An even updated comment to circumvent Amazon's technical efforts to stop it. Amazon's lawsuit claims complexity is violating the Computer Fraud and Abuse act, which is a controversial law that's basically the federal anti hacking law. This is a big deal. Here's Amazon's statement. Quote we think it's fairly straightforward that third party applications that offer to make purchases on behalf of customers from other businesses should operate openly and respect service provider decisions whether or not to participate. This helps ensure a positive customer experience and it's how others operate, including food delivery apps and the restaurants they take orders for, delivery service apps and the stores they shop from and online travel agencies and the airlines they book tickets with for customers. That's Amazon making direct comparisons to food delivery apps and online travel services in the context of AI agents, baby, that's the doordash problem. Now, I've asked a lot of CEOs over the past year about the doordash problem, and the wild thing is, none of them seems nearly as concerned as Amazon. They're certainly not filing lawsuits. In fact, some of them seem downright relaxed. For example, here's what Lyft CEO David Rischer had to say when I asked him about the doordash problem.

David Risher / Oliver Kharraz (11:13)

Like, the most extreme version of what you're saying is I go to ChatGPT and I say, please come pick me up, and some rando comes pick me up and there's no guarantee, there's no service, there's no. Like, that would be bad. I don't think a lot of people would be super excited about just some rando coming, picking me up in sort of an unbranded service and whatever it is. So if it's not going to be sort of an unbranded just rando picking me up, then it probably has to be, you know, one of the guys who are doing existing rideshare and that's us. And then we've got all sorts of ways where we can compete. If they try to disintermute, you say, well, no, I actually have a preference here. And we're going to do a whole bunch of different things to make sure that you have a very, very strong preference for asking for us by name, not just saying, you know, I, I want to get to a place.

Nilay Patel (11:51)

I'd say this is the most common response to my questions about the doordash problem, that people have a lot of existing strong brand relationships and that you're more likely to want to get your AI to get a car from Uber or Lyft instead of some random company. Maybe all these companies just charge higher fees to customers that come from AI and it all just works itself out. Besides, you still have to build that service, connect supply and demand, manage drivers, field customer service requests. And that's really hard. So it's unlikely that anyone else does that in a purely AI native way. Actually, the best version of that argument that I heard was from ZocDoc CEO Oliver Karaz, who more or less said, go ahead and try.

David Risher / Oliver Kharraz (12:22)

Here are the questions you should ask yourself. Question number one, Are these agents simply going to completely displace yourself? Right. Anyone who is running a business that interacts with the real world knows that that's not going to be the case. Right? Because of that learning curve, because of all the edge cases, all these things like Even if the AI is where to start learning about them, we're so much further ahead. We can always deliver a better experience. So this is the coast of England problem. Our cartographers have been at this for 20 years. There's no way that anyone would catch up to us anytime soon. So they're not going to put us out of business.

Nilay Patel (13:00)

I look at some of these companies and they say, well, screw it, we're just going to go click around on your website, we're just going to open a browser and we're going to click the buttons for the user and we'll do that in the background. And you might never know, you might never know that this happened. Perplexity is going to do a browser. That is probably how their agent will work. Knowing Perplexity, that is probably how their agent will work. That destroys your leverage, right? You have to detect their agent and say, you can't do automated browsing. And there's no framework, there's no negotiation framework for that.

David Risher / Oliver Kharraz (13:29)

So while they do that, they are not making any money. And I make money as I used to, so that's actually cool. So I don't think there's really a threat there. And if they are going to negotiate, if they do want to have some of that money, I think these companies that are the Ubers, the Airbnbs, the doordash of this world, are in a unique position to dictate their terms in a way that they could never do with Google.

Nilay Patel (13:51)

I got the same kind of response from TaskRabbit CEO Anya Smith, who kind of dared Apple to start a taskrabbit of their own.

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Nilay Patel (14:36)

Oliver and Anya's perspective here is important because I think it represents a pretty defiant attitude towards the agentic web. Zocdoc has spent more than 20 years building a platform to help find a doctor and doing the Hard work of integrating with the chaotic US healthcare system. Dazkrabbit is really good at getting someone out to hang up a TV. These moats are so broad and so deep. These CEOs don't really feel like they have any competition, let alone from AI. At the same time, when I asked Uber CEO Dara Khashashawi about the doordash problem, he was pretty open that it is something he thinks about.

Dara Khosrowshahi (15:05)

We talk about it all the time and time will tell as to what the right decision is. I believe in running open platforms. I don't believe in companies that try to fight the course that technology is taking. They always get left behind. I think we should go to where consumers want us to go. I do think that's all nicey nicey, but at the same time, one of the advantages that we have is we have unique inventory. I think as it relates to AI and these agents, et cetera, we want to work with these players. I think we come from a place of strength because of the unique inventory and the fragmentation of these markets that we're organizing. And then we're going to build our own agents as well. And I think that end state, as long as we're thinking about the consumer, we're thinking about our earners and our merchants, I think we'll be okay.

Nilay Patel (15:57)

And Daro was one of the few CEOs to give me a straight up answer when I asked how much he might consider charging AI companies if they try to sit between him and his customers. So I come to you and I say, I want to be able to get cars from Uber. What is the percentage toll? What is the extra margin? You would have to charge me dollars and cents to make it worth it for me to take the customer away from you in that way. Because when the customer opens your app, you get to cross sell them into Uber 1, or say, would you like some food when you arrive? Or all of these other incremental opportunities that you would forego if I take that customer.

Dara Khosrowshahi (16:31)

So I have a weird philosophy on this, which is initially, I charge you zero. Okay? Like I think that companies, sometimes alarm.

Nilay Patel (16:41)

Bells just went off at every.

Dara Khosrowshahi (16:42)

No, no, listen. It's like people spend so much time trying to figure out what the economics might be when the first thing is, let's try it out, is it going to be a good experience or not? Is your scheduling actually going to work or is it going to be off and the driver has to wait for 10 minutes, which is terrible. Let's just figure it out. Okay? Then once you optimize the experience. We can measure is, are you an incremental consumer for Uber or is, are you totally cannibalistic? If it's cannibalistic, then I'm going to charge a lot of money. You know, I'm going to say you can't have any money, right? Because basically you're getting the benefit, you're getting my content, you're not bringing me any business at all. If it is incremental, then I would pay some take rate. Is it a 5% take rate, 10% take rate, 20% take rate? Depends on the incrementality. But I think so much of innovation is slowed down because companies try to figure out the economics first. First figure out the experience and then the economics. They always listen, if I do a bad deal for a year, who cares? I'm going to renegotiate with you. And I'm building stuff for the next 10 years. It's success or failure isn't going to be determined. Is my take rate 5% or 20% in year one? Now it can set a precedent and precedents are dangerous. So that's why I would say let's charge zero. Let's try it out, let's see what the experience is, let's try to measure out what the value add is and then the economics essentially will take care of themselves.

Nilay Patel (18:16)

If you're making the mental comparison to the App Store era like I've been, that might sound familiar. Build the business first, get all the customers and then figure out what to charge in order to make a profit. That's always been the Uber way and it's not really a surprise to hear it again in this context. So at this point you might be wondering, what does DoorDash think about the doordash problem? We've been trying to get DoorDash CEO Tony Hsu on the show to go deeper on all of it, but in the meantime, head of Communications Ali Moussa did send us a statement saying, quote, we have launched several integrations with partners who offer doordash incremental demand channels such as ChatGPT, Google and Yelp. No single channel monopolizes customer attention. What makes DoorDash valuable is not where you place an order, but the end to end experience, including reviews, personalization, real world fulfillment and support. A channel would have to replicate all of our end to end functionality to fully serve a customer. Each time we've integrated with partner properties, we've continued to grow faster and at larger scale. Tony, if you're listening, I would love to have you on decoder to unpack that a little more. I did get a more fleshed out version of that idea from Airbnb CEO Brian Chesky, one of my favorite decoder guests, who told me that he simply doesn't think a single company can build all of the interfaces for everything. There's this AI maximalist view that there's going to be like one or two AI models and one or two applications that rules them all. And you use this one app and this one model for everything in the world. If you take that to its logical conclusion, you also start to go to this place where almost like one company rules everything. And I think there's numerous problems with the AI maximalist view that it's one company to rule them all. I don't think companies just want to be data layers. And so these platforms or these new interfaces are only as good as the companies participate. And the companies only participate if they can have a relationship with their own customer. Again, I've been asking about this problem for months and hearing all of these very pragmatic answers. Sundar, when I asked him about it, made a very down to earth comparison to brands and retailers and credit cards, all of whom take cuts from every transaction.

Sundar Pichai (20:12)

It's tough to predict, but I do think over time, if you're removing friction and improving user experience, it's tough to bet against those in the long run. And so I think if in general you're lowering friction for it and people are enjoying using it, somebody's going to want to participate in it and grow their business.

David Risher / Oliver Kharraz (20:38)

Yeah, right.

Sundar Pichai (20:39)

And like, would brands want to be in retailers? Why don't they sell directly today? Yeah, like, why won't they do that?

Nilay Patel (20:47)

I don't know. Why?

Sundar Pichai (20:48)

Because retailers provide value in the middle. Right. And like, you know, why do merchants take credit cards? Right. Like, why pay? I mean, I'm just saying. So like, there are many parts, like, and you find equilibrium because merchants take credit cards, because they see more business as part of taking credit cards than not.

David Risher / Oliver Kharraz (21:07)

Right.

Sundar Pichai (21:07)

And which justifies the increased cost of taking credit cards.

Nilay Patel (21:11)

Similarly, Microsoft CTO Kevin Scott told me that all of their work on agents won't come to anything if they don't make the economics work. You know, you have a business and like, you want your business to be able to transact with users via their agent. Like, that has to make good business sense in order for you to be willing for that to happen at all. Like, you can't just hack your way around that and expect it to be a durable thing. Like, even if you can temporarily figure out some kind of tactical magic to get around the brittleness of the actual technology, like, you also have to get rid of the brittleness in the business model. So here you have all of these smaller players saying they want to see how things play out, and even saying they think they have a lot of leverage. You have Google and Microsoft saying it needs to all make business sense, and Google CEO making a direct comparison to retail so why is Amazon, a literal retail giant, going on the offensive against AI agents first and hardest? We'll get into that right after the break.

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Nilay Patel (23:29)

We're back talking about the doordash problem and how it's ignited a new front in the AI browser wars. We were just talking about how all the CEOs I've talked to on decoder have framed the doordash problem. For me, it's mostly been very calm and even confident, although I've been predicting for a while that eventually someone would push back. But I was completely surprised when it was Amazon that pushed back first. And it gets perplexity. Of all companies, perplexity isn't exactly a household name, and Comet isn't taking any market share from Chrome anytime soon. At first I thought Amazon was just picking on a smaller player to make a point, maybe set some precedent. But the more I thought about it, the more it occurred to me that Amazon might have the most to lose in a world of AI agents. It has the biggest ad business, the most lucrative subscription service in prime, and it's a force of habit default for millions of shoppers worldwide. Letting an AI Agent disrupt. Any or all of that would be dangerously costly. And on top of that, Amazon might be far less differentiated and easier to replace than something like Uber. Hear me out first. Ads are a huge business for Amazon. Anytime you shop with Amazon, you see sponsored products, sponsored brands, regular old display ads. Lots of companies spend millions of dollars in marketing budgets buying preferred placements across Amazon. And it's become a meaningful part of its business and the entire advertising ecosystem. In fact, Amazon reported $17.7 billion in advertising revenue in its most recent quarter, a 24% increase year over year. That puts it on track to pull in more than 60 billion DOL dollars in ad revenue in 2025 alone. That makes Amazon's ad business the third largest among tech giants, behind only Google and Meta. And the company is now diving headfirst into AI advertising with tools for brands to generate images, product descriptions and even video ads. Amazon's ad business is now so robust that it's selling the technology that powers it to other retailers. For Amazon, this is a huge, profitable business, one that's growing to rival aws. But if an AI agent does your shopping for you, you won't see those ads and you certainly won't care if some brand paid to put their product first on the list. So browsers like Comet with Agentix shopping features are an existential threat to Amazon's huge and growing advertising business. AI browsers are also a threat to prime itself. Subscribing to prime is a major reason people shop on Amazon by default. But if you can just tell your browser to buy something at the lowest price available from any retailer, maybe you shop on Amazon less. Maybe that prime subscription is less worth it. Over time, all the other companies we talked to talked about how you trust their brands to do things in the physical world, like sending you a car. That Amazon's already turned itself into a commodity provider of weirdo dropship products from Alphabet soup companies. And it wouldn't take a lot to disrupt that if people are just sending agents out to do the shopping for them. Amazon's smart. This is a problem it's already trying to solve on its own platform. It has its own AI shopping assistant called Rufus, which can navigate the huge number of products and vendors on the site. And it's trialing an AI bot called Buy for Me that can go out and make purchases for you on other websites. The fact is that maybe you don't trust some five minute company to book a doctor or hang a TV or send you a car in time to catch a flight. But you'd be perfectly happy to just take the cheapest price on a USB C cable from anyone offering it, which would make a lot of Amazon's retail competitors very happy. And Amazon simply can't risk losing its relationship with its customers and its status as a default shopping destination. If Amazon does partner with agentic AI companies, it's only going to do it on favorable terms that it negotiates directly. I know this because Amazon CEO Andy Jassy said so in the company's most recent earnings call. He said that the agentic web reminded him of the early days of search engines as, quote, sources of discovery for commerce, and added that you had to kind of figure out the right way to work together. It's weird to think of Amazon as having one of the least defensible moats in tech, but AI scrambles everything, and it feels like Amazon has a lot at stake if the courts ultimately side with Perplexity. So why does Perplexity think it can get away with it? Perplexity's point of view is not exactly subtle. We can just look at the companies on blog posts titled Bullying is not Innovation. As you might imagine, it makes some pretty bold claims about how the future of the Internet should work. By the way, Perplexity has a history that's kind of important to mention. The company first began making a name for itself a few years ago when it launched its AI powered search engine in December 2022. Instead of partnering with news organizations, Perplexity began scraping websites for the information it would compile into AI summaries for users. In some cases, newsrooms are finding paywalled content surfacing in Perplexity search results, which eventually resulted in the company getting sued by Dow Jones, the publisher of the Wall Street Journal, and the New York Post. And the lawsuits haven't let up since. In September, Perplexity was sued by Encyclopedia Britannica and Merriam Webster, and just one month later it was sued by Reddit. Since then, like OpenAI, perplexity has started going out and striking deals with news organizations to license their content. I should disclose here that the Verge's parent company, Vox Media, has one of Those deals with OpenAI and might be making other deals in the future. I really don't know. Overall, what I do know is that Perplexity is very much the ask forgiveness and not permission player in the AI ecosystem ecosystem, and the company certainly loves getting in trouble for attention. All that said, openly violating Amazon's terms of service is a pretty risky stunt for attention. The company isn't backing down in that blog post, Perplexity casts itself as an innovator fighting for the user and striving to create a better Internet. And Amazon is a bully trying to squash progress with legal threats. Perplexity called Amazon's lawsuit a, quote, threat to all Internet users in an attempt to, quote, make life worse for people. The company says, quote, user agents are exactly that, agents for the user. They're distinct from crawlers, scrapers, or bots. A user agent is your AI assistant. It has exactly the same permissions you have, works only at your specific requests, and acts solely on your behalf. The argument here is that an AI agent is the same as you. If you can access a website well, your agent should be able to as well. If you've been at all thinking about how AI will interact with labor, well, here it is. Perplexity says explicitly that software is becoming labor to justify its agents accessing Amazon's website in violation of Amazon's terms of service. To be honest, I have no idea how to feel about that. I couldn't even tell you how to begin to feel about that. In fact, I invite you to tell me how to feel about that. Our email address is decoderverge.com and we really do read all the emails. In any event, Perplexity doesn't want permission for its agents to access websites and it doesn't think it needs it. Its blog post ends pretty defiantly. Amazon forgets how it got so big. Users love it. They want good products at a low price, delivered fast. Agentic shopping is the natural evolution of this promise and people already demand it. Perplexity demands the right to offer it. Look, I don't know how this fight's going to end up. I don't know how the industry solves the doordash problem. I don't even know if these AI agents are good enough or will work well enough to make the problem bigger than Perplexity starting shit. What I do know is that everyone's thinking about it. And if all this AI investment is going to be worth it, the companies building agents need to start thinking about how all the people that actually do the real labor these services provide get paid real money that makes those jobs worthwhile. Because the thing that really brings on doordash is not having anyone to deliver sandwiches at all. That's Decoder. Thank you for listening. I hope you enjoyed it. If you'd like to let us know what you thought about this episode, or really anything else at all, drop us a line. We're gathering up questions and feedback for our end of year special and we'd love to hear from you. You can email us@decodorthevge.com Like I said, we really do read all the emails. Or you can hit me up directly on threads or bluesky. We're also on YouTube now. You can watch full episodes at Decoder Pod and we have a TikTok and an instagram @decoder pod2. They're a lot of fun. If you like Decoder, please share it with your friends and subscribe. Where we get Podcasts Decoder is a production of the Verge, part of the Vox Media Podcast Network. The show is produced by Kate Cox and Nick Statt, edited by Ursa Wright. Our Editorial director is Kevin McShane. The Decoder Music is Red Breakmaster Cylinder. We'll see you next time.

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