Microsoft and OpenAI position for retail AI battle

Microsoft and OpenAI have both made significant moves this week to integrate shopping capabilities directly into their AI assistants, setting the stage for a new competitive landscape in AI-mediated commerce.

Microsoft officially unveiled its Copilot Merchant Program this week. The program enables retailers to connect their product catalogs with Microsoft's AI assistant, allowing customers to discover and purchase products without leaving the Copilot application.

According to the Copilot Team, the program will provide "a personal shopper at their service." This functionality includes guided product discovery, price alerts, and product recommendations, all accessible through the Copilot application interface. The system also allows customers to complete purchases directly within the Copilot app without visiting merchant websites.

"From price alerts to instant suggestions on similar products, and check-out directly within the Copilot app, you can unlock frictionless shopping for your customers by joining Copilot's Merchant Program," according to the Copilot Team's announcement.

Meanwhile, evidence has emerged suggesting OpenAI is preparing a similar commerce initiative in partnership with Shopify. New code strings discovered in ChatGPT's public web bundle include "buy_now" buttons, price and shipping fields, product-offer ratings, and most notably, a "shopify_checkout_url" parameter. These code elements indicate that OpenAI is developing native purchase functionality within ChatGPT.

The code snippets suggest a handoff to Shopify's hosted checkout system rather than generic affiliate links, pointing to a formal partnership between the companies. While OpenAI has not officially announced this feature, the presence of these code strings in production assets suggests a near-term launch is likely.

Technical implementation details reveal strategic approaches

Microsoft has created a dedicated onboarding process for retailers, beginning with a Merchant Interest Form that collects basic business information: merchant name, website URL, contact name, and email address. This streamlined application suggests Microsoft aims for rapid merchant acquisition to build its shopping platform's inventory breadth.

The technical integration appears designed to facilitate product data synchronization between merchant systems and Microsoft's Copilot platform. "Once you're in the Copilot Merchant Program you can also share key product specifications with us, ensuring we have up-to-date details on all your items, so that they are suggested to customers properly," the announcement explains.

The Copilot implementation focuses on natural language understanding for product discovery. Current examples of search functionality shown in Microsoft's announcement materials include consumer queries like "shop ingredients for corn chowder," "best running shoes for rainy weather," "birthday gift for my sister," and "best back support chair brands." These examples highlight Copilot's intent to serve as both a product recommendation engine and a shopping assistant capable of understanding contextual purchasing needs.

OpenAI's approach, based on the code evidence, appears to be taking a similar direction but with deeper Shopify integration. For users, this would allow purchases to complete inside the chat instead of requiring users to navigate to external websites, turning ChatGPT into a full-funnel shopping tool. Shopify's extensive merchant base would gain distribution through ChatGPT without requiring additional integration work from individual retailers.

The timing of these developments is noteworthy. Microsoft's official launch on April 18 was quickly followed by the discovery of OpenAI's Shopify integration code. This close timing suggests both companies are responding to competitive pressure in the AI-assisted shopping space.

Shifting power dynamics in digital commerce

The introduction of direct checkout functionality within both AI platforms represents a significant shift in e-commerce dynamics. Rather than directing users to merchant websites to complete transactions, purchases can be finalized within these AI ecosystems. This change potentially alters the traditional relationship between merchants and their customers by inserting AI assistants as intermediaries in the transaction process.

For retailers considering participation in these programs, there are both opportunities and considerations. The potential for increased visibility and sales through new channels must be balanced against reduced direct customer relationships and possible commoditization of offerings within AI-mediated shopping environments.

Financial terms of the merchant relationships have not been publicly disclosed by either Microsoft or OpenAI. Questions remain about potential revenue sharing, referral fees, or other monetization approaches as these programs scale.

Shopify's apparent partnership with OpenAI aligns with the company's broader AI strategy. A leaked April 7 memo from Shopify CEO Tobi Lütke instructed staff to "hire an AI before you hire a human," underscoring the company's push to embed AI across its platform. An OpenAI partnership would connect Shopify's commerce infrastructure with one of the most widely used AI assistants.

Microsoft and OpenAI are not alone in pursuing AI-mediated commerce. Perplexity shipped one-click "Buy with Pro" functionality last November and has opened its own merchant API. OpenAI has been testing e-commerce actions in its Operator research agent, which already books travel and places grocery orders for Pro users.

These developments come as consumers increasingly use AI assistants for shopping research and decision-making. By capturing transactions within their ecosystems, both Microsoft and OpenAI potentially position their AI assistants as both product discovery engines and direct commerce channels.

Implications for marketing professionals

These developments carry significant implications for digital marketing professionals and e-commerce strategists. The shifts fundamentally alter how brands may need to approach product discovery, customer acquisition, and transaction optimization in AI-mediated commerce environments.

Marketing teams must now consider how their products appear not just to human shoppers, but to algorithmic recommendation systems. Success will likely require optimization of product data, specifications, and metadata to ensure visibility when customers make natural language requests to AI assistants. Traditional SEO practices may evolve toward "AI optimization" - ensuring products are correctly categorized, described, and contextualized for machine understanding.

The direct checkout functionality raises questions about customer journey ownership and attribution. Marketing professionals accustomed to direct customer relationships may need to recalibrate acquisition strategies, lifetime value calculations, and customer retention programs to account for transactions occurring within AI ecosystems rather than on merchant-owned properties.

Data strategy becomes increasingly critical in this landscape. Marketers will need to determine what customer insights remain available when transactions occur in third-party AI environments and how to supplement these insights to maintain comprehensive customer understanding. Companies may need to develop new approaches to first-party data collection to compensate for potential gaps in transaction intelligence.

The programs also create opportunities for innovative marketing approaches. Brands that effectively understand how customers engage with AI shopping assistants could develop product descriptions, specifications, and positioning specifically optimized for algorithmic discovery. Pioneering marketers might find competitive advantage in mastering the nuances of AI-mediated commerce before their industry peers.

These developments accelerate the ongoing transformation of digital commerce from destination-based shopping (where customers visit specific brand websites) toward ambient commerce (where shopping opportunities exist throughout digital experiences). Marketing teams that proactively develop strategies for this emerging environment may gain significant advantages as consumer behavior continues evolving toward AI-assisted purchasing.

Timeline

• April 7, 2025: Leaked memo from Shopify CEO Tobi Lütke instructs staff to "hire an AI before you hire a human"
• April 18, 2025: Microsoft's Copilot Team publishes official announcement of the Copilot Merchant Program
• April 20, 2025: Media coverage and industry analysis of Microsoft's program begins
• April 21, 2025: Code strings suggesting OpenAI-Shopify integration discovered in ChatGPT's public web bundle
• Current status: Microsoft's Merchant Interest Form available for business applications; OpenAI's Shopify integration appears to be in pre-launch development
• Upcoming (dates unspecified): Full program implementation and merchant onboarding for Microsoft's program; potential official announcement of OpenAI-Shopify partnership