Meta's Muse AI: Good or Bad for E-Commerce? Shopify and Amazon Are Taking Opposite Approaches.

Meta Platforms (NASDAQ: META) is pushing on the gas pedal for its new artificial intelligence (AI) agent, Muse. Since launching on Sept. 8, the mobile app has accumulated more than 5 million downloads, according to Sensor Tower estimates. With Meta putting its marketing power behind the app, that number could climb even faster over the next few weeks.

Muse is designed to help users get things done. In his keynote address at Meta Connect last week, CEO Mark Zuckerberg said Muse will make people money. That could come in the form of canceling unused subscriptions, finding unclaimed property, or, more likely, being a smarter online shopper.

But not everyone is on board with agentic shopping. Amazon (NASDAQ: AMZN), the world's largest online retailer, blocked Muse from its platform. Meanwhile, Shopify (NASDAQ: SHOP), which helps brands build their own e-commerce sites, has fully embraced agentic commerce and is among the many partners Muse has attracted since its launch.

Here's why the e-commerce leaders are diverging, and what it means for investors in Meta, Amazon, and Shopify.

Image source: Getty Images.

Will Muse improve sales for its e-commerce partners?

If Muse makes shopping online faster and easier, it seems likely that customers will spend more online. On the face of it, that seems to benefit any retailer plugging into Muse and other AI agents.

Shopify stands to benefit by making integration extremely easy for small retailers, increasing the value of using its platform. But it stands to benefit even more if more of the gross merchandise value sold online goes through ShopPay, its payment platform. The checkout option is ubiquitous across Shopify-built e-commerce sites, removing the friction of typing in payment information for every small merchant an online shopper might encounter these days.

Shopify's merchant solutions are the largest and fastest-growing segment of its business, and that growth is largely fueled by its payment platform. That makes finding any way possible to get its merchants' products in front of potential customers its No. 1 objective right now. As customers shop from more merchant websites, ShopPay becomes increasingly valuable, and its penetration of gross merchandise value increases. As such, Shopify may be willing to share some revenue with Meta, producing a win-win situation for both companies.

Amazon could also benefit from increased sales on its website. However, the cost of sales through an AI agent like Muse could far outweigh the benefits. That's because Amazon has built a massive advertising business that's generated $76 billion over the last 12 months. That may only be 12% of its total retail operations revenue, but that's high-margin revenue. It's what's helped drive Amazon's overall operating margin significantly higher over the last few years.

If more people use artificial intelligence agents to crawl Amazon's platform, that's potentially fewer opportunities to influence shoppers with advertisements. That means agentic AI is a huge threat to Amazon and any other retailer that derives a significant portion of its profits from retail media advertising. That includes Walmart, which has used advertising as a key source of profit growth over the last few years.

Meta won't be the only company releasing an AI agent like Muse. As agentic AI becomes increasingly accessible, Amazon could lose market share to smaller competitors.

Can Amazon overcome Meta?

Investors trying to determine how big a threat Muse and other agentic shopping services could be to Amazon need to consider Amazon's competitive advantages. It holds several advantages that could make it more valuable to AI agents than AI agents are to Amazon.

First, it has a massive logistics network that's capable of delivering millions of different items to U.S. households within hours. Customers used to that convenience are unlikely to give it up easily, even if Muse removes the task of searching for and ordering an item.

Second, Amazon holds a tremendous amount of shopping and purchase data on its hundreds of millions of customers. Likewise, it has high-quality data on the products listed on its website, including customer reviews and exact details for each item variation. While Meta also knows a lot about its users, as do other AI developers, Amazon has far more valuable information about its shoppers' preferences. That could make using Amazon's first-party shopping agent much more appealing for most shoppers.

Finally, Amazon has tens of millions of Prime members. Prime is an extremely effective loyalty program, as it offers access to fast, free shipping and other benefits, such as streaming media. That makes Amazon the first place shoppers go, and they may check Muse or another agent that aggregates e-commerce listings as a secondary option.

There are multiple ways Amazon exercises its power. It could drive more merchants to use its logistics network, further increasing its value and pricing power, and pushing its merchant services revenue higher. It could strike deals with AI agents to allow access to its platform, but include sponsored listings in the results. Finally, Amazon may simply push more users to its own agentic platform, where it controls the user experience.

If Muse increases the total amount of online commerce, that can be good for both Shopify and other Meta partners, as well as Meta itself, but it might not pose as big a threat to Amazon, given that its biggest competitive advantage is its physical fulfillment network. That's not something easily replicated. Meanwhile, brick-and-mortar retailers could end up some of the biggest losers, so it's no wonder we're seeing some of the largest retailers partner with Meta to ensure they remain relevant.

Adam Levy has positions in Amazon and Meta Platforms. The Motley Fool has positions in and recommends Amazon, Meta Platforms, Shopify, and Walmart. The Motley Fool has a disclosure policy.