I’ve been thinking more about $GOOGL lately and I am coming more to the opinion that the real disruption to the search business could be around the corner. With the proliferation of so many different AI chatbots, I would have thought that on its own would have weighed on their search business, but the reason it hasn’t is simple. There are monetizable searches and non-monetizable searches. What matters for Google’s profits is monetizable searches, and that is why Google can lose search activity and STILL be at an all-time high in search profits. The non-monetizable searches are leaving, but not the monetizable ones… yet. (Google will talk about search queries being at an all-time high, but that includes AI search queries and follow-ups, which aren’t comparable because it is a different product and monetized differently. Apple’s Head of Services, Eddie Cue, noted that Safari search queries were down for the first time in April 2025.) I think this is just the first wave of AI, and it hasn’t negatively impacted Google’s search profits. Chatbots are inherently a more informational product, but agents are about action, and with action comes encroachment on monetizable searches. Booking travel with agents, which has already become a popular Instinct and Muse use case, cuts out Google’s opportunity to show sponsored search ads. Ask Muse to find you the best running shoes and it will run its own search and give you options. There is no opportunity to show a Google search ad in that transaction. This goes for essentially all high-intent shopping, where you know what you want but are still in research mode. While agentic shopping is new and might take years to gain consumer adoption, Meta disclosed that over a quarter of engaged Muse users who shop through it have an average purchase size over $200. Instinct already has $1b in transaction volume, half of it going to travel. In my conversation with @eric_seufert , he was of the opinion that agentic shopping is largely a mirage and that the commission Muse will charge will be a nonstarter for people. After thinking about it more, I have two thoughts. First, I don’t think it’s actually a problem if agents charge a small fee for completing purchases. I could see merchants ultimately bearing the cost of the transaction. Why would they do that? Because they will get more sales from a new channel. If we think about how online businesses get sales, it is either 1) through marketplaces like Amazon, 2) through online ads, or 3) direct to their website or app. 1) Marketplaces like Amazon have a commission that often ranges from 8-17% (this is just the sales commission, not including advertising or logistics). Companies accept this fee because they are getting sales they wouldn’t have otherwise. 2) Ads, whether through Instagram, Google search, etc., are usually significantly more than a couple % (if we think of the ad cost as a % of the sale). 3) Direct sales may not have any direct cost, but a lot of brand advertising is needed to build a brand that gets direct sales. Taken together, I think the agentic channel, even with a business eating an additional ~2-4% fee, could be cheaper than most of their other channels. Said differently, if agentic shopping is bringing the business new sales, the ROI is still pretty high, even with the fee included. Some businesses may fight this, but others will see the advantage of eating the fee and offering a lower price to win sales. There is a historic parallel here with credit card fees. Initially merchants scoffed at paying ~3% credit card fees, but eventually they learned that accepting cards led to more sales and often higher tickets too. Most businesses today eat the fee. Second, some small businesses already surcharge for card usage, and consumers by and large still opt to pay it rather than use a debit card or cash. Consumers have a preference for convenience, and I would imagine that translates to agentic commerce. It’s the same with food delivery. When you order on DoorDash or UberEats, you can often pay less by ordering directly through the restaurant’s website or app (powered by ChowNow, for instance). Despite being cheaper, it’s still not that popular a way to order food. While these two arguments point to different parties paying the fee, it doesn’t really matter which one wins out. (And it could be a mix of both). The point is that I don't think a take-rate to monetize agentic AI on its own is going to stop the ecosystem from growing, regardless of where that fee lands. And for the threat to Google to be real, it doesn't actually matter how Agentic AI monetizes-- it could be through subscriptions or ad supported, but as long as the transaction is not through Google's agent it is still the same threat. I think agentic shopping will be a real thing, and as adoption grows, we are likely to see more pressure on Google’s monetizable searches. Google is responding with their own agentic capabilities, so they may be able to preserve some of the activity on their platform and some of the economics, but I still believe they are unlikely to end up with a business as good as their legacy search business. *~* This on its own is not a stock thesis on Google, since they still have many other businesses and initiatives that can make up for the shortfall, but I believe this will eventually be a notable headwind for them. Happy to hear any push back and for more check out my latest video on Google below!

With everyone talking about $META’s Muse, I asked Gemini how my thesis that $BKNG is not at direct risk from AI Agents has held up. TLDR is that: 1) AI Agents may use Booking but they aren’t likely to want to replace what Booking already does. 2) BKNG pays for a lot of sponsored ads already so that money could go to Meta instead of Google 3) They have a big direct booking business (their app) with a loyalty program and those users are harder to move purchase activity from (however, displacement here means higher ad costs, lower margins, but not an existential risk) ~*~*~ Summary of Drew Cohen’s Argument In his deep dive on Booking Holdings, Drew Cohen addresses the prevailing bear case: autonomous AI agents will scrape hotel websites, bypass Online Travel Agencies (OTAs), and render Booking.com obsolete. His rebuttal argues that Booking.com’s moat is operational, regulatory, and logistical—not just a search interface: The Integration Barrier: Scraping the open web for live travel inventory is brittle and compute-intensive. In Europe (Booking’s core profit center), supply is heavily fragmented across 100,000+ independent boutique hotels. These properties lack standardized APIs or the technical capability to host server-side agent protocols (like Anthropic’s MCP). The "Merchant of Record" (MoR) Problem: Direct booking requires taking on fraud prevention, chargeback risks, cancellation management, dynamic foreign exchange (FX), and compliance with complex regional regulations (such as the EU's DMA, DSA, and GDPR). Cohen argues frontier AI labs have no desire to become the Merchant of Record. Customer Service & Operational Liability: Travel is a high-stakes, non-deterministic purchase. If an AI hallucinates or an overbooking leaves a traveler stranded in a foreign city at 2 AM, tech labs will not run a 24/7 human customer service operation to rebook them. The Intermediary Becomes the Infrastructure: Because of the friction above, frontier AI companies will opt to plug directly into Booking.com’s aggregated APIs and live inventory feeds rather than trying to rebuild the entire plumbing of global travel. Does Meta’s Muse Invalidate the Thesis, or Does It Hold Up? Meta’s launch of Muse—which operates inside a cloud virtual machine (Muse Secure VM), drives a desktop browser, and checks out using Stripe Link—directly tests Cohen's thesis. The thesis largely holds up, but Muse breaks some of Cohen's technical assumptions while validating his broader economic conclusions. Where Muse Challenges Cohen’s Arguments 1. It Bypasses the Need for APIs or MCP Cohen argued that 100,000 independent hotels would never adopt modern server-side agent protocols. Muse proves they don't have to. Because Muse controls a virtual browser that reads the DOM, clicks buttons, and fills out forms just like a human traveler, it can theoretically execute a reservation on any hotel's standard website without that hotel building an integration. 2. It Evaporates the "Merchant of Record" Barrier Cohen asserted AI labs wouldn't facilitate direct bookings because they refuse the liability of being the Merchant of Record. Muse sidesteps this entirely by acting as a client-side proxy: it deploys single-use virtual cards generated via Stripe Link, autofilling the guest's payment directly into the merchant's existing checkout form. Meta never acts as the Merchant of Record; the hotel (or OTA) retains that liability. Why Cohen’s Core Thesis Still Largely Holds Up Despite overcoming those technical hurdles, Muse runs squarely into the structural realities Cohen highlighted: 1. Muse Still Navigates to Booking.com If a user instructs Muse to "find and book a 4-star boutique hotel in Florence under $250 with free cancellation and great breakfast," Muse does not attempt to scrape and parse 80 separate Italian boutique hotel websites. Cont…