Google brings personalized discounts to AI search and launches open commerce protocol
The search giant is rolling out personalized discount ads in its AI mode and introducing an open protocol designed to tie retailers more closely to the Google ecosystem.
Google unveiled the Universal Commerce Protocol (UCP) at the National Retail Federation in New York. The open standard aims to let AI agents operate across the entire shopping journey - from product discovery to purchase to customer service. Google developed the protocol with Shopify, Etsy, Wayfair, Target, and Walmart, and more than 20 additional companies including Mastercard, Visa, and Zalando have signed on to support it. Rather than requiring individual connections for each agent, UCP provides a universal interface compatible with existing protocols like Agent2Agent (A2A), the Agent Payments Protocol (AP2), and the Model Context Protocol (MCP).
In practice, users will soon be able to buy directly from US retailers while researching products in Google's AI Mode and the Gemini app. Payments go through Google Pay, with PayPal support coming later. Google also announced a "Business Agent" that lets customers chat directly with brands in Google Search.
Discounts instead of traditional search ads
The real news, though, is about advertising. With its "Direct Offers" pilot, Google is responding to growing pressure on its classic "Sponsored" model - a system that generates tens of billions of dollars but faces increasing threats from AI chatbots.
"Direct Offers" lets retailers serve exclusive discounts to users who are ready to buy in AI Mode, with bundles and free shipping options coming later. Google's AI uses contextual information from the conversation to determine when an offer is relevant and should appear. Pilot partners include Petco, e.l.f. Cosmetics, and Samsonite. If someone searches for an easy-to-clean dining room rug, for example, retailers can display a special discount.
"Direct Offers" lets retailers serve exclusive discounts to users who are ready to buy in AI Mode, with bundles and free shipping options coming later. Google's AI uses contextual information from the conversation to determine when an offer is relevant and should appear. Pilot partners include Petco, e.l.f. Cosmetics, and Samsonite. If someone searches for an easy-to-clean dining room rug, for example, retailers can display a special discount.
Walmart hedges its bets with Google and OpenAI
Alongside the protocol announcement, Walmart revealed a partnership with Alphabet. Customers will be able to buy items on Gemini in the coming months, with the selection spanning clothing, consumer goods, and groceries from Walmart and Sam's Club.
But Walmart is also working with OpenAI to offer shopping on ChatGPT. According to David Guggina, Walmart US Chief E-Commerce Officer, that deal is still in its very early days. The retailer appears to be hedging its bets on both platforms.
On a related note, Alphabet's drone delivery service, Wing, is expanding its Walmart partnership as well. An additional 150 stores will offer drone delivery by 2027. The most popular items so far are eggs, ground beef, and avocados.
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