The DoorDash Problem: How AI browsers are a huge threat to Amazon

0:00All right, let's talk about AI, agents, and what I've been calling the DoorDash problem. The DoorDash problem? The DoorDash problem. The thing I've been calling it is just the DoorDash problem. See, the DoorDash problem is about to define the next battles over how AI interacts with the web, and it might completely transform not only how you order a sandwich, but how the entire internet economy works in general. Hello and welcome to Decoder. I'm Nelai Patel, editor-in-chief of The Verge, and Decoder is my show about big ideas and other problems. So here's what I've been calling the DoorDash problem.

0:30Briefly, it's what happens when an AI interface gets between a service provider, like DoorDash, and you, who might send an AI to go order a sandwich from the internet instead of using apps and websites yourself. That would mean things like user reviews, ads, loyalty programs, upsells, and partnerships would all go away. AI agents don't care about those things, after all. And DoorDash would just become a commodity provider of sandwiches and lose out on all the additional kinds of money you can make when people open your app or visit your website. Now, the DoorDash problem isn't specific to DoorDash.

0:59It's just the example I like to use, because I think sandwich delivery is a funny proxy for the structure of the global economy. But who owns the customer is a big problem for all of the service companies that came up in what you might call the App Store era. Uber, Lyft, Airbnb, TaskRabbit, ZocDoc, you name it. I've been asking the CEOs of these companies about the DoorDash problem for months now, because I've been predicting that eventually one of them is going to decide it doesn't want to give up its customers to AI and try to block agents entirely. Recently, my prediction came true. But it wasn't a small player that decided to push back against AI.

1:33It was one of the biggest players of all. Amazon sued Perplexity to try and prevent its AI-powered comment browser from shopping on Amazon.com, a move which Perplexity has called bullying. So here we are. The first major front in the war over who gets to browse the web and who controls the economic experiences of the future has opened up. So I think it's time for us to dive deep into the DoorDash problem. See, once upon a time, if you wanted to order a sandwich from your favorite local sandwich shop, you'd just head over there and order at the counter. Or maybe you'd make a phone call directly to the store for delivery.

2:05The face-to-face interaction with another human being was basically what the entire economy looked like, outside of mail order catalogs and QVC. The big dot-com bubble of the late 1990s? Well, that was fueled by the belief that all of these interactions would happen on the internet. That instead of going in person or ordering over the phone, You'd visit websites to order sandwiches or get pet supplies or have groceries delivered. The bet was that a huge part of the economy would move online, and the companies that got there first would get huge and make everyone rich. Looking back, it's obvious that this was the right idea.

2:36The problem was that the internet in the late 1990s looked like desktop browsing on huge tower PCs with CRT displays, accessed over 56k dial-up modems. It was the right idea and the wrong form factor all way too early. People didn't actually do all their shopping on these machines, and the bubble popped. But all of these ideas came back around in the smartphone era, because the smartphone was and remains the perfect form factor for ubiquitous access to the internet. Apple launched the iPhone in 2007, the App Store came in 2008, the same year as Android and what would become the Play Store, and the app economy started to actually boom.

3:12Companies like Uber and Airbnb and DoorDash exploded in popularity, and we really have seen huge chunks of the economy move to the internet because of the smartphone. Yes, it took enormous sums of venture capital money, and you might say it was wasteful, but that money was spent, and these services are all huge businesses today. So huge that spending a bunch of VC money to start another Uber is a really bad idea. There's a reason you don't see that happening. You just can't do this again on smartphones. But a lot of the same VCs who funded the smartphone app economy are looking for the next big thing, and they're backing AI.

3:45Specifically, agentic AI. We've all seen the demos, we've heard the promises, the bet, the bubble, is that we'll move the economy yet again. From smartphone apps to AI agents that just do all the work for you. And this isn't just some idea from a few wide-eyed startup founders, although there are definitely a few of those in the mix. Apple, Google, Amazon, Microsoft, OpenAI, you name it. We've all announced plans for assistance for AI-powered web browsers that work in this way. Now, here's where the problem comes in. The promise of the agentic economy is built on an extremely brittle relationship between the DoorDashes of the world and the AI companies who deploy agents.

4:21And it's not at all clear how things will play out to everyone's benefit. It's also not clear how anyone can stop it. Think about it this way. It's easy to build an agent that can go get you a sandwich if you simply assume that DoorDash exists, that there's a company out there building and maintaining a big database of restaurants and menus, another database of available delivery drivers, and the ability to take your order, send it to a restaurant, process the transaction, get a delivery person lined up, and handle customer service if something goes wrong. But if people stop using the apps and websites and start sending agents instead, well that business really starts to break down.

4:52Because DoorDash and all the other service providers make their money by having a direct relationship with customers that can monetize in lots of different ways. Basic stuff like promotions and deals and discounts, ads for other stuff, their own subscriptions like DashPass, and whatever other ideas they might have to make money in the future. But AI doesn't care about any of that stuff. If you ask for a car to the airport, an AI might just open Uber and Lyft and always pick the cheapest ride. These big App Store era services might just become commodity databases of information competing on price alone.

5:21And that might not be sustainable, even if it might be the future. Earlier this year at Google I.O., Google DeepMind CEO Demis Asadis said he thinks we might not even need to render webpages at all in an agent-first world. Near a term, the web is going to change quite a lot if you think about an agent-first web. Like, does it really need to, you know, it doesn't necessarily need to see renders and things like we do. As it happens, I asked Google CEO Sundar Pichai about that comment, and he tried to clarify it a little. I have been thinking about this in the context of services like Uber and DoorDash and Airbnb.

5:52Why would they want to participate in that and be abstracted away for agents to use the services they've spent a lot of time and money building? Two things, though. First, there's a lot to unpack. It's a fascinating topic. Rick, the web is a series of databases, et cetera. We build a UI on top of it for all of us to consume. This is exactly what I wanted, is the web is a series of databases. It is. But I think I listened to the Demis Sergei conversation yesterday. I enjoyed it. I think he's saying for an agent-first web, for a web which is interacting with agents, you would think about how to make that process more efficient.

6:28I'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.

6:57The 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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8:30We'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.

8:56If 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 its increasing Gemini integrations, and now OpenAI's Atlas browser, it's an attempt to rethink how we use the web.

9:30Or 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, and even updated comment to circumvent Amazon's technical efforts to stop it. Amazon's lawsuit claims Perplexity is violating the Computer Fraud and Abuse Act, which is a controversial law that's basically the federal anti-hacking law.

10:02This 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.

10:37Baby, 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 Risher had to say when I asked him about the DoorDash problem. 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 and sort of an unbranded service and whatever it is.

11:12So 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 ride share and that's us. And then we've got all sorts of ways where we can compete if they try to disinterpreting. 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 want to get to a place. I'd say this is the most common response to my questions about the DoorDash problem.

11:38People 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 Carraz, who more or less said, go ahead and try.

12:05Here 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, even if the AIs were 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.

12:41So they're not going to put us out of business. 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.

13:09And there's no framework. There's no negotiation framework for that. So while they do that, right, 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, right, if they do want to have some of that money, I think these companies that are the Ubers, the Airbnbs, the DoorDashs of this world are in a unique position to dictate their terms in a way that they could never do with Google. I got the same kind of response from TaskRabbit CEO Anya Smith, who kind of dared Apple to start a TaskRabbit of their own.

13:40And there's some economic way that we can figure out a system where it works for both parties. Siri, in this case, wants to be able to provide these types of services, and they can't really do it without TaskRabbit because only TaskRabbit actually has a network of thousands of taskers. And we've cultivated that network. We know who they are. We understand their skills. They've all been background checked. Siri's not going to do that. Or, you know, Apple or whoever. They're just not going to be able to do that. We will always have the strength and supply. And we will continue to go where the customer is to make sure as many of them have access to our platform as possible.

14:19Oliver and Ania'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 U.S. healthcare system. DazGrabbit is really good at getting someone out to hang up a TV. These modes are so broad and so deep that 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 Khashashoggi about the DoorDash problem, he was pretty open that it is something he thinks about.

14:47We 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, like, get left behind. I think we should go to where consumers want us to go. And I do think that's all nicey-nicey, right? But at the same time, one of the advantages that we have is we have unique inventory. So 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.

15:30And 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 OK. And Dara 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?

16:04Because when the customer opens your app, you get to cross-sell them into Uber One 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 away. So I have a weird philosophy on this, which is initially I charge you zero. Okay? Like I think that companies sometimes – Alarm bells just went off at every moment. 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?

16:43Let's just figure it out, okay? Then once you optimize the experience, we can measure is, are you an incremental consumer for Uber or are you totally cannibalistic? If it's cannibalistic, then I'm gonna charge a lot of money. You know, I'm gonna 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 like so much of innovation is slowed down because companies try to figure out the economics first.

17:27First 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, right? So, and I'm building stuff for the next 10 years. Success or failure isn't going to be determined. It might take 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. If you're making the mental comparison to the App Store era, like I've been, that might sound familiar.

18:03Build the business first, get all the customers, and then figure out what to charge in order to make a profit. It'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 Musa 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.

18:30No 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.

19:04There'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.

19:42Again, 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. It's tough to predict, but I do think over time, like, you know, like 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 is going to want to participate in it and grow their business.

20:22Would brands want to be in retailers? Why don't they sell directly today? Why won't they do that? Because retailers provide value in the middle. And like, you know, why do merchants take credit cards? Right. Like, why? I'm just saying. So, like, there are many parts. And you find equilibrium because merchants take credit cards because they see more business as part of taking credit cards than not. Right. And it justifies the increased cost of taking credit cards. 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.

21:00You 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 like to be a durable thing. like even if you can temporarily figure out some kind of technical 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 wanna see how things play out and even saying they think they have a lot of leverage.

21:42You 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.