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Cue the violins. Perplexity on Tuesday accused Amazon of bullying it by demanding that the AI startup no longer allow its users to send their AI assistants to Amazon to buy stuff. The startup, which is an expert at public relations theatrics, published a long blog post entitled “Bullying Is Not Innovation,” in which it claimed to be “fighting for the rights of users” who are demanding the right to buy stuff through AI agents. I’d love to see a protest march of Perplexity users who feel aggrieved by this state of affairs.
Don’t get me wrong. While websites have long had the right to block bots that attempt to crawl them, it’s also not unheard of for big tech firms to seek to stymie potentially disruptive tactics by newcomers. An AI agent—which in theory can take action on behalf of users, like browsing Amazon’s marketplace and buying stuff—would certainly qualify as a disruptive newcomer. Amazon generates tens of billions a year selling ad space on its marketplace, a highly profitable revenue stream that will diminish if people start using agents to shop rather than browsing themselves. So Perplexity may be right about Amazon’s possible motivation.
Amazon didn’t help itself with its weak response. It said Perplexity should respect Amazon’s wishes that its shopping agent avoid Amazon’s marketplace, to “ensure a positive customer experience.” Amazon CEO Andy Jassy was more convincing on the company’s earnings call last week, when he detailed what was wrong with outside AI agents offering to buy stuff for people. “There’s no personalization, there’s no shopping history, the delivery estimates are frequently wrong, the prices are often wrong,” he said. That sounds believable, given the hit-and-miss nature of AI chatbots generally. (These consumer reviewssuggest Perplexity’s agent shopping service leaves something to be desired.)
But is this a reason for Amazon to block Perplexity? It’s possible Amazon is worried shoppers will blame it for screwups on their order, rather than holding Perplexity responsible. Jassy also said last week that Amazon will find “ways to partner” with outside agents. Amazon is presumably trying to control how agents evolve, at least on its own marketplace (see our story on this subject from July and a more recent story on Perplexity’s commerce effort).
This situation has echoes of the battle underway in enterprise software, as companies like Salesforce push back against the attempts of newer AI search tools like Glean to connect to their apps. AI is turning the established order in tech upside down. It’s understandable that newcomers like Perplexity want to claim victim status, but things are never as simple as they seem.
Uber’s Good Quarter, Spotify Not So Much
We got a mixed bag of quarterly earnings on Tuesday. Here’s a quick rundown:
Spotify’s growth rate decelerated for the fifth consecutive quarter, dropping to 7% from 20% in the second quarter of last year. That’s a sign that the impact of price increases, put into place last year, has now dissipated. Meanwhile, Spotify’s ad business is losing ground—ad revenue fell 6% in the most recent quarter. More here.
Uber did the opposite, showing accelerating growth. The ride-hailing and food-delivery giant reported 20% top-line growth, up 2 percentage points in the second quarter, lifted by its food-delivery business in particular. Uber was once a cash drain but is now minting money. The company generated $2.2 billion in free cash flow in the quarter.
Pinterest lifted revenue 17%, maintaining the same growth rate it has reported all year. More here.
Shopify, which sells e-commerce software tools to independent merchants, posted 32% revenue growth, a tad better than in the second quarter. More here.
In Other News
• Sequoia Capital partner Roelof Botha told the venture firm’s limited partners he planned to pass the role of “senior steward,” the firm’s top job, to two partners: Alfred Lin and Pat Grady. Botha said he will transition to a new role advising the partnership while continuing to serve on the firm’s boards.
• Tony Kim, lead portfolio manager of the BlackRock Technology Opportunities Fund, said on The Information’s TITV on Tuesday that tech companies will have to shed their aversion to leverage and use debt to fund much of their capital expenditures for AI.
• Norway’s sovereign wealth fund plans to vote against Tesla’s proposed $1 trillion CEO compensation package for Elon Musk, the fund said on Tuesday.
• Advanced Micro Devices said Tuesday its revenue rose 36% to $9.2 billion in the third quarter, beating its earlier projection by 8 percentage points. But AMD also projected revenue in the current quarter would rise 25% to $9.6 billion, plus or minus $300 million.
Today on The Information’s TITV
Check out our latest episode of TITV in which we break down Palantir, Uber and Shopify earnings, as well as talking with a BlackRock executive about big tech valuations.
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