Microsoft is stepping into the AI-powered shopping arena with its Copilot Checkout feature, posing a direct challenge to established players like Amazon, Google, and OpenAI. Announced at NRF 2026, the annual retail industry conference, Copilot Checkout allows users to complete purchases directly within the Copilot AI chatbot, eliminating the need to be redirected to external websites. This move signifies Microsoft's ambition to transform AI conversations into tangible commercial transactions.
Microsoft is also launching Brand Agents, pitched as a complete solution for Shopify merchants to add AI assistants to their websites, along with new AI tools to assist store employees and help retailers enhance their online product listings and metadata.
The Competitive Landscape
Microsoft's entry intensifies the competition in the burgeoning field of AI-driven commerce. OpenAI launched Instant Checkout in ChatGPT last September, partnering with Shopify and Stripe to enable users to buy from over a million merchants. Google followed suit in November with its "Buy for Me" feature, allowing its Gemini assistant to purchase products on a user's behalf. Amazon has also been developing AI shopping assistants like Rufus and the "Buy for Me" feature.
Despite its enterprise inroads, Copilot lags behind ChatGPT in consumer market share. Recent data indicates ChatGPT holds approximately 68% of AI chatbot web traffic, with Google Gemini at 18% and Copilot in single digits.
Microsoft's Strategy
Microsoft is banking on its existing enterprise technology footprint and established relationships with large retailers to gain an advantage. Unlike Amazon and Google, which compete directly with retailers through their own marketplaces, Microsoft isn't a retailer. Retail has long been a major vertical for its enterprise cloud and software business, with many large chains running on Azure and Microsoft 365. Microsoft is emphasizing its commitment to responsible AI and the fact that retailers retain control over customer relationships and data.
Kathleen Mitford, Corporate Vice President of Global Industry Marketing at Microsoft, stated that the company has designed Copilot Checkout to ensure retailers maintain ownership of customer relationships and data. This is a crucial differentiator, as many merchants are wary of ceding control to retail rivals or AI intermediaries.
How Copilot Checkout Works
Copilot Checkout surfaces products from partner retailers within Copilot search results. Purchases can be completed without leaving the conversation, streamlining the buying process. Microsoft emphasizes that the retailer remains the merchant of record, responsible for fulfillment and customer service. Copilot Checkout integrates with payment platforms like PayPal, Shopify, Stripe, and Etsy. Shopify merchants will be automatically enrolled in Copilot Checkout with an option to opt-out. Non-Shopify merchants can apply to onboard.
PayPal is supporting the launch of Copilot Checkout by powering merchant inventory surfacing, branded checkout, guest checkout, and credit card payments.
Challenges and Opportunities
While Microsoft is advertising Copilot Checkout as a way to bypass merchant sites entirely, questions remain about the safeguards in place to prevent errors in product details. OpenAI has acknowledged that its shopping assistant might make mistakes and encouraged users to verify information on the merchant's site. Ensuring data accuracy and a seamless user experience will be critical for Copilot Checkout's success.
Despite these challenges, the AI shopping assistant market presents significant opportunities. AI-powered assistants can provide personalized product recommendations, answer questions, and guide customers toward confident purchase decisions. Retailers using AI have seen higher average order values, improved conversion rates, and better customer retention.
With Copilot Checkout and Brand Agents, Microsoft is positioning itself to capture a share of this growing market. By leveraging its existing relationships with retailers and focusing on data ownership and responsible AI, Microsoft aims to offer a compelling alternative to its competitors.
