What the Perplexity-Amazon lawsuit could mean for digital advertising

We all love that one friend who tells us what to buy, right? Maybe not.

In early November, Amazon sued Perplexity AI over the AI startup’s shopping agent, Comet, which can automatically place orders for users on e-commerce sites including Amazon. The outcome of the case, which Perplexity has argued comes down to the advertising business of one of the world’s largest shopping platforms, could have wide-ranging implications for the marketing industry, ad sellers, and retailers.

In the lawsuit, Amazon alleges that Comet AI poses security risks, and that Perplexity disguised the tool’s automated browsing as human activity, constituting fraud. But in an opposition filing later in November, Perplexity’s legal team argued that it believes Amazon’s central concern comes down to Amazon’s inability to sell products to human users through ads if AI agents use the platform instead.

“AI agents don’t have eyeballs to see the pervasive advertising Amazon bombards its users with,” the filing read.

In a counter-filing, Amazon’s legal team seemed to acknowledge that argument, but pushed back: “Amazon’s concern is not that its customers will miss out on advertising,” its filing read. Instead, it argued that the company’s “reputation will suffer when customers miss valuable opportunities to find cheaper products, reduce shipping costs, schedule faster delivery, and see recommendations” on Amazon if they were to use Perplexity’s tool. And while Perplexity, Amazon claims, “suggests that any lost sales from these harms can be compensated by money damages,” it offered “no explanation as to how the court could calculate the number of customers who did not visit the Amazon Store due to lost goodwill.”

Both Perplexity and Amazon referred Marketing Brew to their public statements when asked for comment.

The outcome of the lawsuit could have larger implications for any publisher or retailer that operates direct-to-consumer relationships, Andrew Frank, VP and distinguished analyst at Gartner, told Marketing Brew.

“There’s a huge amount of value at stake for anyone who wants to have a relationship with their customers,” he said, noting that agentic shopping could stand to cannibalize ad revenue opportunities, as well as degrade direct relationships between consumers and shopping platforms.

It’s a concern that others in the industry are keeping a close eye on, too. Tyler Murray, chief enterprise solutions officer for VML in North America, recently told Marketing Brew that this year, he expects agentic AI shopping tools to “really become not just a threat to retail media, but truly an existential threat.”

In some ways, the Perplexity-Amazon arguments mirror that of the rise of search engines like Google, which have pulled information from publishers and affected ad revenue on those sites, a trend that’s only continued as Google’s AI-generated search results and chatbots have been shown to decimate traffic to news publishers.

“It’s threatening to change the economic model of publishing, from advertising and subscriptions to licensing fees that they can extract from answer engines for using their content in contexts that they have no visibility into,” Frank said. “I think [this] would be a continuous continuation of the marginalization of the publishing business and the retail business.”

Amazon isn’t eschewing AI tools altogether. It has struck up partnerships with other AI companies, including a deal with OpenAI that was announced in November right before the company made its first court filing against Perplexity. And during Amazon’s Q3 earnings call at the end of October, the company’s president and CEO, Andy Jassy, told investors and analysts that even as the company is growing its own agentic commerce offering, Rufus, it was having conversations with third-party agents and expected to partner with them over time.

It’s possible that there could be “some other way that you can influence agents that’s like advertising for machines,” Frank suggested, which could potentially replace the lost revenue streams coming from digital advertising.

But in terms of the issue at the center of the Amazon-Perplexity case? “It’s a tough question for the courts to decide,” he said. “On the one hand, Perplexity can make the point that these agents are being authorized by the people who have given them their credentials. Amazon, of course, says that this is a species of fraud, because their terms of service are meant for human visitors, not for machine visitors…I don’t know what the answer is, but it’s an extremely important case to watch.”