Who will benefit more from AI agents when it comes to spending - companies or you?

By Christine Ji and Hannah Pedone

There's an agent arms race unfolding, supercharging the battle for your wallet

Mark Zuckerberg says 'Muse will make you money,' but companies are also working with agents to extract cash from customers.

Consumers have plenty of artificial-intelligence assistants at their disposal that can analyze their spending and optimize their finances. Popular use cases of Meta's viral AI agent include processing refunds, canceling subscriptions and negotiating lower home- and car-insurance rates. OpenAI's Dots and SpaceXAI's Grok Bot feature similar capabilities.

But businesses are not passively watching this unfold. They're using AI to prepare for a world in which more transactions are done by agents. AI agents may give everyday shoppers an edge, but the technology is igniting an even more intense tug of war over consumer dollars.

While AI can help you save money, an agent working on behalf of a company that understands personal tastes can also encourage more spending. AI agents are becoming more proactive in encouraging user engagement. Last month, the AI-assistant startup Instinct announced that it was rolling out curated product and travel recommendations. DoorDash (DASH) also launched an AI agent that consumers can text directly to place orders.

Isaac Medeiros, founder of AI-copywriting platform ContentForge, used his Instinct agent to book flights for an upcoming camping trip. Shortly after, Medeiros received a message from Instinct suggesting camping gear. While Medeiros didn't buy anything, he was impressed by the relevance of the recommendations that were made.

Medeiros told MarketWatch he doesn't believe AI agents will handle every step of the shopping process. "People like to shop because shopping is entertainment," Medeiros said. "We like perusing and we like looking at flights sometimes."

As a result, brands are optimizing their content to be discovered through different stages of AI browsing. It's a process called AEO - or answer engine optimization. Companies are using ContentForge to create a digital footprint that allows their products to be picked up and suggested by large language models, Medeiros said.

AI agents could significantly change how consumers discover brands, according to Kacy Kim, a marketing professor at Bryant University. "Visibility may depend less on advertising to people and more on being clearly described to agents through specs, structured product data and reviews that match the criteria agents ask about," Kim said.

That means retailers will need to ensure their product data is structured and complete enough for an agent to understand and compare, Kim added. Brand positioning and pricing strategies will also face greater scrutiny as AI agents reduce products to a handful of key attributes in side-by-side comparison tables.

Armed with LLMs capable of ingesting massive quantities of data, companies can fight back and more accurately model consumer behavior and deliver personalized results. E-commerce platform Shopify (SHOP) is helping businesses with this. The company's Shopify Catalog standardizes merchant data to provide chatbots with a centralized database to search, compare and recommend products. Data syndicated by Shopify drives more than double the conversion rate of traditional channels, Paulina McPadden, investment manager at Baillie Gifford, told MarketWatch.

"The landscape for merchants in e-commerce is becoming increasingly complex," McPadden said.

From burgers to health insurance

The rise of personal agents has led some observers to speculate that businesses that depend on subscriptions - like Netflix (NFLX) and athletic-club operator Life Time (LTH) - would take a hit.

"Everyone got on Muse, Instinct - all these different new agents, and the first thing that they did was have it rip through their email and find all of the subscriptions that they are subscribed to and unsubscribe them. So the entire breakage model of the internet is just getting vaporized right now," Dave Morin, an angel investor and founder of Slow Ventures, said on a podcast.

Shares of a number of companies tracked by a Goldman Sachs (GS) "consumer inertia" index - which tracks companies that rely on customers' habits - have fallen since Meta released Muse.

The index includes a range of companies with subscription-based or membership-based business models, like Planet Fitness (PLNT), the New York Times (NYT) and travel companies like Booking Holdings (BKNG) and Expedia (EXPE), according to several reports.

Shares of Intuit (INTU), a company included in Goldman's index, were also under pressure recently since Muse's release. But Morningstar analyst Luke Yang believes the fears are overblown.

"On the user end, delegating tax returns or personal finance planning to a personal agent requires a different level of trust than delegating travel booking/ day-to-day purchases, in my opinion," he said, adding that the users would need to share their SSNs and tax forms with an AI-agent provider.

"Overall, the stock is under pressure, but we do not see a material impact from AI agents on Intuit products," he added.

Not all subscription-based products may be impacted equally, but consumption habits are likely to change, Tanay Jaipuri, partner at Wing Venture Capital, said.

"Some element of subscription optimization will happen," Jaipuri said. A company like Netflix might have a bigger moat due to proprietary content and high volumes of daily active users. However, customers can compare options for phone plans and insurance policies and switch providers with greater ease.

"The big focus from this will probably be on how to improve the product and engagement so that you don't get subject to this," Jaipuri said. That's likely a good thing for consumers, as businesses will face increasing pressure to offer more valuable products.

As AI agents handle more of these transactions, Jaipuri said, businesses might offer more personalized pricing strategies for subscriptions. While a dozen different cellphone plans could create choice fatigue for a human shopper, an AI agent can easily compare different options and provide a recommendation.

"Companies could create more SKUs that are meant for when the agent is buying on your behalf to price accurately ... so they can charge you given your exact needs," Jaipuri said. SKUs, or stock-keeping units, are unique codes used to track product variations.

The financial-services industry is another casualty of investors' Muse-fears. Shares of Charles Schwab (SCHW) for instance, fell roughly 5% following the release. And some have even posited that AI agents could trigger a bank run.

Apollo Chief Economist Torsten Slok wrote in a recent essay: "If every household uses AI agents to optimize the return on their cash balances, banks could lose a share of the cheap deposits they rely on to make loans, which would be a problem for the entire financial system."

However, Argus Research analyst Stephen Biggar told MarketWatch that he doesn't see any risk of a run on deposits from an AI tool.

"If you're not happy with 2% on your checking account, and you want 8%, you also might have to tie your money up for like 15 years," he said, explaining that higher yields come with a cost, and agents don't change that fundamental fact about the financial system.

For many businesses, AI offers them more strategies to combat subscription cancellations and customer churn. AI-powered predictive analytics are especially useful in the banking industry and tech consulting firm, Kitrum documented in a blog post earlier this year. AI can monitor trends across transactions and interactions, such as declining engagement and changes in transaction patterns, to identify early signs of churn. Banks can then deploy tailored retention tactics such as personalized offers or proactive notifications.

Other companies are extracting insights from large amounts of data for algorithmic-pricing strategies. One example is McDonald's (MCD), which analyzes millions of daily transactions to set what the company calls "the optimal price" depending on franchise location and menu item, Reuters reported earlier this week. According to the report, McDonald's pricing interface gives franchises information about local customers' price sensitivities and willingness to pay.

Yum Brands (YUM), the parent company of chains like KFC and Taco Bell, is also reportedly using AI business tools to determine pricing strategy, according to Reuters. Yum Brands didn't immediately respond to a MarketWatch request for comment.

Outside of the fast-food industry, healthcare providers are putting AI to work. Analysis from BlueCross BlueShield released last month showed that over 60% of hospital systems are using AI technologies to scan lab results and electronic medical records to identify secondary diagnoses, which BCBS says can "move a patient into a higher-severity, higher-reimbursement billing category."

Satty Chandrashekhar, Healthcare and Life Sciences AI Leader at Bain, told MarketWatch that AI can improve detection of patient conditions.

"Better documentation can capture patient complexity that was previously missed. The same tools can also make it easier to identify billable conditions, whether or not those conditions change care," he said.

See also: The murky AI milestone that has some of the industry's leading voices increasingly on edge

-Christine Ji -Hannah Pedone

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10-08-26 0847ET