Amazon sued Perplexity AI on Tuesday over the startup’s “agentic” shopping feature, which uses automation to place orders for users, saying it covertly accessed Amazon customer accounts and disguised automated activity as human browsing.

The clash highlights an emerging debate over regulation of the growing use of AI agents and their interaction with websites, aiming to make them more autonomous and capable of handling everyday online tasks.

Perplexity, which has grown rapidly amid the boom in AI assistants, has previously rejected the U.S. shopping giant’s claims, saying it was using its market dominance to stifle competition.

The startup did not immediately respond to a Reuters request for comment on Amazon’s lawsuit filed in the U.S. District Court for the northern district of California.

AMAZON WANTS PERPLEXITY TO END ‘MISCONDUCT’

In the suit, Amazon accused Perplexity of covertly accessing private Amazon customer accounts through its Comet browser and associated AI agent, and of disguising automated activity as human browsing.

Perplexity’s system posed security risks to customer data, Amazon added, and the startup had ignored repeated requests to stop.

“Rather than be transparent, Perplexity has purposely configured its CometAI software to not identify the Comet AI agent’s activities in the Amazon Store,” it said.

“Perplexity’s misconduct must end,” Amazon added. “Perplexity is not allowed to go where it has been expressly told it cannot; that Perplexity’s trespass involves code rather than a lockpick makes it no less unlawful.”

Perplexity earlier said it had received a legal threat from Amazon demanding that it block the Comet AI agent from shopping on the platform, calling the move a broader threat to user choice and the future of AI assistants.

“Bullying is when large corporations use legal threats and intimidation to block innovation and make life worse for people,” the company wrote in a blog post.

In the complaint, Amazon accused Perplexity’s Comet AI agent of degrading customers’ shopping experience and interfering with its ability to ensure customers who use the agent benefit from the tailored shopping experience Amazon curated over decades.

Third-party apps making purchases for users should operate openly and respect businesses’ decisions on whether to participate, Amazon said in an earlier statement.

CREDENTIALS STORED LOCALLY, SAYS PERPLEXITY

Perplexity is among many AI startups seeking to reinvent the web browser around artificial intelligence, aiming to make it more autonomous and capable of handling everyday online activities, from drafting emails to completing purchases.

Amazon is also developing similar tools, such as “Buy For Me”, which lets users shop across brands within its app, and “Rufus”, an AI assistant to recommend items and manage carts.

The AI agent on Perplexity’s Comet browser acts as an assistant that can make purchases and comparisons for users. The company said user credentials remain stored locally and never on its servers.

“Easier shopping means more transactions and happier customers,” it added. “But Amazon doesn’t care, they’re more interested in serving you ads.”

The startup said users had the right to choose their own AI assistants, portraying Amazon’s move as a bid to protect its ad-driven business model.

The Motion Picture Association is asking Meta to stop referring to content shown to teen accounts on Instagram as “guided by PG-13 ratings,” saying it is misleading and could erode trust in its movie ratings system.

A lawyer on behalf of the MPA sent Meta Platforms a cease-and-desist letter asking the tech giant to “immediately and permanently disassociate its Teen Accounts and AI tools from the MPA’s rating system.”

Instagram had announced last month that its teen accounts will be will be restricted to seeing PG-13 content by default. The Motion Picture Association, which runs the film rating system that was established nearly 60 years ago, said at the time that it was not contacted by Meta prior to its announcement.

The MPA says Meta’s claims claims that its Teen Accounts will be “guided by” PG-13 ratings and that its Teen Account content settings are “generally aligned with movie ratings for ages 13+” are “false and highly misleading.” The association’s movie ratings, which range from G to NC-17, are done by parents who watch entire movies and evaluate them to come up with a rating.

“Meta’s attempts to restrict teen content literally cannot be ‘guided by’ or ‘aligned with’ the MPA’s PG-13 movie rating because Meta does not follow this curated process,” the association’s letter says. “Instead, Meta’s content restrictions appear to rely heavily on artificial intelligence or other automated technology measures.”

In a statement, Meta said it updated its teen content policies to be “closer to PG-13 movie standards— which parents already know” so parents can better understand what their teens see on Instagram.

“We know social media isn’t the same as movies, but we made this change to support parents, and we hope to work with the MPA to continue bringing families this clarity,” the company said. Meta added that its intent was never to suggest that it partnered with the MPA or that the material on Instagram had been rated by the movie association.

Snap beat third-quarter revenue estimate on Wednesday and said it has partnered with Perplexity AI to integrate its artificial intelligence-powered search engine into Snapchat, sending the social media firm’s shares surging around 23% after the bell.

AI startup Perplexity will pay Snap $400 million over one year in cash and equity, with revenue contributions expected from 2026. The integration of Perplexity AI will offer verifiable answers to users’ questions within the Snapchat app.

The deal positions Snap to better compete with larger rivals such as TikTok and Meta-owned Facebook and Instagram, which currently are the preferred destinations for advertisers thanks to their larger user base.

Snapchat’s parent has been leaning on direct-response ads, designed to prompt specific actions such as app downloads or website visits, to bolster digital advertising, even as brand-awareness campaigns show some signs of weakness.

Direct response ad revenue surged 8% during the third quarter, driven by strong demand for “Pixel Purchase” and “App Purchase” ad optimizations that enable businesses to target users most likely to complete a purchase on their website or within their app.

The company’s third-quarter revenue rose 10% to $1.51 billion, beating analysts’ average estimate of $1.49 billion, according to data compiled by LSEG.

Its net loss narrowed to $104 million from $153 million a year ago.

Daily active users (DAUs) of Snapchat increased 8% to 477 million globally, compared with the estimate of 476.3 million.

“They rebounded from an ad platform hiccup in the second quarter, they grew their consumer revenue business, all while continuing to grow their user base,” said Max Willens, principal analyst at Emarketer.

Snap, however, warned that overall DAUs may decline in the fourth quarter, citing changing investment priorities and anticipated impacts from age verification and evolving regulatory landscapes.

Australia’s Social Media Minimum Age bill, set to take effect in December, is among the regulations that Snap expects would impact user engagement.

The company forecast fourth-quarter revenue between $1.68 billion and $1.71 billion, while analysts expect $1.69 billion.

Microsoft and Abu Dhabi’s G42 on Wednesday announced a 200-megawatt expansion of data centre capacity in the United Arab Emirates as part of an over $15 billion investment commitment by the U.S. tech giant in the Gulf country.

The expansion will be delivered through Khazna Data Centers, a unit of G42, and it is expected to start coming online before the end of next year, the two firms said in a joint statement, without providing further details.

Microsoft said this week its investment in the UAE will reach $7.3 billion between 2023 and the end of this year, with a further $7.9 billion earmarked for 2026-2029.

It also announced that President Donald Trump’s administration had approved the export of advanced Nvidia chips for its data centres in the Gulf country, which has been spending billions of dollars to become a global AI hub.

Microsoft invested $1.5 billion last year to take a minority stake in G42, which is also backed by private equity firm Silver Lake, Abu Dhabi sovereign wealth fund Mubadala, and the family office of billionaire investor Ray Dalio.

The expansion will provide further AI and cloud infrastructure to the UAE, “strengthening Microsoft Azure’s secure, scalable, and sovereign cloud services,” the two firms said on Wednesday.

Nvidia CEO Jensen Huang has warned that China will beat the United States in the artificial intelligence race, the Financial Times reported on Wednesday.

“China is going to win the AI race,” Huang told the newspaper on the sidelines of the Financial Times’ Future of AI Summit.

“As I have long said, China is nanoseconds behind America in AI,” Nvidia CEO Jensen Huang said in a statement posted on X late on Wednesday.

“It’s vital that America wins by racing ahead and winning developers worldwide,” he added.

The artificial intelligence chip leader’s chief in October said that the U.S. can win the AI battle if the world, including China’s massive developer base, runs on Nvidia systems. He, however, lamented that the Chinese government has shut it out of its market.

China’s access to advanced AI chips, particularly those produced by Nvidia — the world’s most valuable company by market capitalisation — remains a flashpoint in its tech rivalry with the United States, as both nations vie for supremacy in cutting-edge computing and artificial intelligence.

“We want America to win this AI race. No doubt about that,” Huang said in the Nvidia developers’ conference held in Washington last month.

“We want the world to be built on American tech stack. Absolutely the case. But we also need to be in China to win their developers. A policy that causes America to lose half of the world’s AI developers is not beneficial in the long term, it hurts us more,” he added.

U.S. President Donald Trump said in an interview aired on Sunday that Nvidia’s most advanced Blackwell chips should be reserved exclusively for American customers.

Nvidia has not applied for U.S. export licenses to sell the chips in China, citing Beijing’s stance toward the company, CEO Jensen Huang previously said. Trump added that Washington would allow China to engage with Nvidia, but “not in terms of the most advanced” semiconductors.