Meta and Amazon rivalry explained: delving into the battle over AI-driven purchases.

Meta appears to have a promising AI product, but the company’s journey to dominating this new era of consumer artificial intelligence is uncertain.

Meta introduced Muse, a user-friendly personal AI assistant, two weeks ago. The accompanying app, serving as the interface for the agent, became the top-ranked app on the US Apple App Store on Friday (18), leading to an 11% increase in Meta’s stock on Monday (21).

The product is already encountering privacy concerns. Amazon has recently prevented Meta’s AI assistant from making purchases on their platform, and experts suggest that rivals should introduce their own versions of Muse soon.

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Meta stands to gain significantly if it can sustain its early momentum with a product that can access extensive user data, including text messages, emails, and calendars. This comes at a time when investors are seeking greater returns on the substantial investments the company has made.

Truist Securities estimates that Muse could bring in an extra US$ 28.5 billion in revenue for the company by 2030.

“I’m unsure if this can last, as observing this segment suggests that Google and OpenAI could quickly adapt to any new developments,” noted Youssef Squali, an analyst at Truist. “Currently, it seems the perception of Meta is shifting.”

Discover the primary obstacles Meta must overcome for Muse to prosper.

Privacy violation and worries about security

Muse becomes increasingly valuable when users grant the AI agent greater access to their personal information like emails, texts, and calendars. Analysts note that many users are hesitant to share their account passwords, particularly for Meta services.

A recent survey conducted by Oppenheimer & Co. found that just 8% of American consumers are willing to entrust their passwords to Meta, whereas 30% are comfortable sharing them with Google.

Muse has been downloaded more than 2.5 million times since its release on September 8, according to SensorTower data. The number of users who granted Meta complete access to their online activities remains uncertain.

Another issue connected to this is security.

Meta emphasized in the release announcement that Muse was created with a strong emphasis on security, specifying that each agent operates on its individual secure and dedicated computer.

Before the launch, Meta AI’s leader, Alexandr Wang, expressed in an interview that the company was primarily worried about the risk of an agent inadvertently sharing personal data or deleting crucial emails rather than the AI going rogue.

Analysts still have concerns.

Squali from Truist expressed concerns that a potential invasion by unauthorized agents obtaining and misusing personal information could have a detrimental impact on the entire industry.

Access to additional websites

Muse is as effective as the websites you can visit, but Amazon reduced its usefulness on Sunday night.

Amazon prevented Muse from entering its website and purchasing items for its customers, stating that Muse had not informed Amazon beforehand or received authorization to access the store.

Third-party apps that shop for customers in various companies must operate transparently and respect the decisions of service providers regarding participation, according to an Amazon representative.

Meta declined to provide a statement regarding Amazon’s choice.

Amazon’s e-commerce platform also has a significant advertising sector, and analysts believe the company will not be willing to cede ground to Meta in this market.

If agents conduct more shopping on behalf of users in the future, it could result in a reduced audience for displaying ads and may prompt a reassessment of Amazon’s business strategy.

“Most online marketplaces either currently possess a substantial advertising sector or have intentions to establish one in the future,” stated technology analyst Josh Beck from Raymond James. “I see that as a major bottleneck.”

Websites should trust that collaborating with AI agents will attract more users and boost their profits without having a detrimental effect overall.

Agents will be prohibited from operating on their websites unless they partner with brands like Shopify, Instacart, and Dick’s Sporting Goods, according to Meta.

The quick and early acceptance of Muse in recent times is also raising concerns that AI could disrupt specific industries, such as financial services.

Stocks of companies in heritage management, brokerage, and banking experienced declines on Tuesday, with Charles Schwab falling by over 6%. Booking Holdings, which owns travel websites, and the insurance company Allstate were also impacted.

Future rivalry

Meta must increase its market presence and prevent losing market share to competitors such as OpenAI and Google, who are expected to introduce comparable products in the near future, as per analysts.

Analysts say Meta benefits from being the initial player in the market, controlling Instagram and Facebook, which provide access to vast amounts of data and a distribution system that is highly effective.

The only similar product currently on the market is an AI agent from a startup named Instinct, which is also growing in popularity but operates on an invite-only basis.

“The arrival time at the market is crucial,” stated Ken Gawrelski, an analyst at Wells Fargo, emphasizing the improvement of assistants as consumers become more adept at interacting with and directing them.

Google has significant computing power that could be utilized to develop a comparable product with a focus on privacy and security, he noted.

Muse utilizes a considerable amount of computational power since each agent operates on its individual virtual machine.

Analysts anticipate OpenAI unveiling a consumer-focused AI assistant within the next one to two weeks, with Apple expected to join the market later on.

Beck, an analyst at Raymond James, mentioned that it is still too soon to form a clear understanding of how this situation will progress, but everyone has started moving in that direction.

Contact Meghan Bobrowsky at meghan.bobrowsky@wsj.com.

Translated by InvestNews