Amazon’s steaming coffee mug

Hi, it’s Spencer from Seattle. Amazon is pitching its merchants on the latest uses of AI for advertising. But first...Three things you need [View in browser]( [Bloomberg]( Hi, it’s Spencer from Seattle. Amazon is pitching its merchants on the latest uses of AI for advertising. But first... Three things you need to know today: • Netflix reported results that topped expectations in all [its major areas]( • Google added its Gemini team to the DeepMind unit, [consolidating AI efforts]( • Sam Altman’s tech ID startup drops “coin” from its name, now [calling itself World]( AI makes it easy If you search for [coffee mugs on Amazon.com]( you won’t be surprised to see the typical product image on a white background near a yellow icon suggesting you add it to your shopping cart. But what if the coffee mug was on a beach, with steam billowing from the top and waves crashing in the background? Such imagery can be easily accomplished with a few clicks rather than sending a production crew to the shore, thanks to advancements in generative [artificial intelligence](. Amazon.com Inc. advertising executives showcased the coffee mug example this week at the company’s[annual unBoxed event]( where it promised to use the latest AI tools to make the site more inspiring to shoppers and more valuable to advertisers. I have no idea if billowing steam or crashing waves make someone more likely to buy coffee mugs, but that wasn’t the point. [Amazon’s message]( was the tools — which produce text and images based on user prompts — are so affordable and easy to use that advertisers can experiment with a variety of campaigns, see which are most effective, and focus their spending on what works. They can also help advertisers quickly update their campaigns based on the time of year. The coffee mug on the beach becomes a coffee mug next to a pumpkin becomes a coffee mug with a Christmas tree in the background. Even without generative AI, Amazon’s [advertising business](bbg://screens/AMZN%20US%20EQUITY%20FA%20PROD) is a juggernaut. It’s on track to top $50 billion in revenue this year and remains on the right side of long-term trends like the ongoing shift of spending from brick-and-mortar stores to websites and people leaving cable television for streaming services such as Amazon’s Prime Video, which started showing commercials this year. Whether [AI tools contribute meaningfully]( to that growth remains to be seen. After the coffee mug presentation, I chatted with an online merchant at the event who sells spill cleanup kits to businesses. Think of the stuff stores, day care centers and restaurants keep on hand in case someone vomits all over the floor. We laughed thinking of what imagery AI would concoct to inspire shoppers to buy her spill kits. Then there’s the question of what happens when everyone selling products on Amazon is using the same tools? Early adopters might see an advantage initially. But eventually, everything could start to look the same. There seemed to be more excitement about the tools from [consultants who make money]( helping Amazon merchants, since it’s a new product they can develop some expertise about and sell. But the merchants I spoke with worried about the complexity despite Amazon’s assurances that the tools are easy to use. The big wild card in Amazon’s investments is whether competing generative AI tools disrupt keyword search. Amazon makes much of its ad revenue selling prominent placement on its website in response to keyword search terms like “coffee mugs.” If people start finding products with [tools other than Amazon’s search engine]( the foundation of its advertising business could start to erode like the beach behind that steaming coffee mug.—[Spencer Soper](mailto:ssoper@bloomberg.net) The big story Meta’s Instagram is sending a video to millions of teenagers warning them of sextortion, a cybercrime that has [proliferated on the site]( in some cases, has driven young users to suicide. The photo- and video-sharing site is being sued by state attorneys general and pressured by lawmakers for its allegedly ill effects on young people. One to watch [Amazon cloud chief Matt Garman speaks to Bloomberg Technology about the company’s interest in nuclear energy as a cleaner source to fuel its AI needs.]( Get fully charged New York City’s comptroller called for regulatory changes that end lockouts that ride-hailers Uber and Lyft imposed on drivers to [keep costs down](. TSMC shares hit a record after the chipmaker raised its 2024 target [for revenue growth.]( Comcast and Charter Communications, already dealing with cable cord-cutters, are also losing subscribers on [another front — broadband](. 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