Key Takeaways
- Amazon has blocked Meta’s Muse shopping agent since Sept. 20, and Y Combinator co-founder Paul Graham called the ban the first opening for an Amazon rival since the company was founded.
- The ban protects Amazon’s ad business, which earns money only when people browse its pages and which props up its retail profits.
- Amazon’s operating margin rose from 2.6% in 2022 to 11.2% in 2025, and the stock trades at 28.6x forward earnings, well below its 49.0x five-year average.
- Amazon’s moat gives it time to let agents in or build one people want, and ad growth in its next report is where any change would show up first.
Amazon (AMZN) is turning away shoppers who send an AI agent to do their buying. One of tech’s best-known investors thinks that gives rivals their first real shot since Amazon was founded.
Since Sunday night, Sept. 20, Amazon has blocked Muse, the new agent from Meta Platforms (META), from shopping on Amazon.com. GeekWire first reported that shoppers who try it now get a popup: “Continued access by an unauthorized AI agent violates Amazon’s Conditions of Use, to which our customers have agreed.”
On Wednesday, Y Combinator co-founder Paul Graham posted on X:
“Amazon banning agents is the first opportunity I’ve seen since Amazon was founded for a startup to create an Amazon competitor. People will want agents to buy stuff for them. It will be one of the main use cases. And they won’t want to use some Amazon-supplied agent to do it.”
Elon Musk’s reply on Thursday? “Seriously.”
One user joked that “Amazon finally found a customer it doesn’t want.” Graham shot back: “The problem is that it’s a group that will gradually expand to include most buyers.”
Why Amazon wants humans browsing
Amazon says Muse never identified itself and appears to store customers’ login details. Meta disputes that last point.
As longtime tech writer M.G. Siegler pointed out on Monday’s episode of the Big Technology Podcast, the ad business explains a lot:
“Agents are not impacted by advertising that they see in their feeds based off of what they’re searching for. That potentially destroys what has been a huge growth driver, as you well know, for Amazon becoming one of the major players in advertising”
That growth driver carries the store. On Wednesday’s Prof G Pod, writer Jack Raines pointed to a 2022 Marketplace Pulse analysis showing that advertising was hiding the fact that “Amazon’s retail business isn’t really profitable.”
Raines’s numbers: Amazon made about $69 billion in ad revenue in 2025, up 22%, and $34 billion of operating income outside Amazon Web Services. Amazon doesn’t say how profitable its ads are, so this is rough math. Even if only half of that ad revenue were profit, that’s $34.5 billion, about everything Amazon earned outside AWS.
You can see this in Amazon’s company-wide operating margin, which went from 2.6% in fiscal 2022 to 11.2% in fiscal 2025.
(That’s the whole company, so AWS did a lot of the lifting too.)
And ads are still growing fast. Amazon’s ad revenue rose 26% to $19.8 billion in the second quarter of 2026.
Is the market already worried?
Somewhat. Amazon trades at 28.6x forward earnings, close to its five-year low of 25.7x in February and far below its 49.0x average.
So the stock isn’t priced for perfection. But a low P/E doesn’t protect you much if the earnings shrink, and by Raines’s numbers, ads that agents never see produce a big share of Amazon’s retail profit.
Isn’t Amazon’s moat enough?
The obvious objection is that Amazon has the warehouses, the delivery network, the Prime members and the selection. An agent hunting for the best price with fast delivery will often end up at Amazon anyway, and Amazon can let it in on its own terms.
That’s fair. But Graham’s follow-up post explains why the ban itself gives something away:
“If they need to ban agents, it must mean people want to use them, or there would be no point. And that in turn means there’s demand for a competitor that allows them.”
Amazon’s answer so far is its own agent. Siegler noted it’s moving its Rufus shopping assistant over to Alexa+, and Seven Seven Six founder Alexis Ohanian urged it on Thursday to go further: “making Alexa not suck is actually not that hard anymore.”
Here’s where I come down. The opening Graham describes is real, but Amazon’s moat makes it narrower than he suggests. A startup that welcomes agents still has to match Amazon on price and delivery, and that took Amazon decades to build.
Still, every month the ban lasts, more people get used to shopping through an agent that isn’t Amazon’s. You could see (and this is pure speculation) Amazon eventually charging agents for access, or selling paid placement inside Alexa’s answers, so it keeps some of the ad money.
The upshot
Graham is right that the ban gives rivals an opening. Amazon’s numbers show why it’s taking that risk anyway: the ads that agents skip are holding up its retail profits. I expect Amazon to let agents in or build one people actually want long before a startup can build a rival delivery network.
Of course, shoppers are only starting to let agents handle checkout. Amazon’s third-quarter ad growth will be the first place to look for a change.
So what is Amazon stock actually worth?
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