Agentic AI Business Rise! a16z Predicts $291 Billion Ad Market Faces Endgame

Merit Systems co-founder Sam Ragsdale wrote on the a16z Crypto blog on Sunday that the rise of autonomous AI agents could mean the end of the current online advertising system. According to Mordor Intelligence, the global online advertising market is expected to reach approximately $291 billion by 2025.

Why the fundamental premise of advertising models is collapsing

Ragsdale points out that for nearly thirty years, the core business contract of the internet has been “pay with attention for free content”: users are distracted by ads while browsing, allowing advertisers to profit, and platforms to sustain themselves. However, when shopping decisions shift from humans to Agentic AI, this contract’s foundation crumbles—agents are unaffected by ads and execute optimal decisions based solely on instructions.

AI platforms like ChatGPT and Gemini have introduced “instant checkout” features for US users in 2025, allowing users to complete purchases directly within conversations without redirecting to external e-commerce sites. Ragsdale predicts that hundreds of millions of consumers worldwide will use AI agents to find products that better meet their needs, merchants will see higher conversion rates, and platforms will earn commissions of 5% to 10%.

Limitations of “walled garden” and the open protocol solution

Ragsdale criticizes current AI checkout implementations, viewing the existing “instant checkout” services as a new form of “walled garden”—merchants must undergo strict approval processes to join, and agents’ actions are structurally limited.

He illustrates the difference with a concrete analogy: “Agents that can only purchase from pre-approved merchants are like employees with company credit cards who can only spend at three stores; agents with open protocols are like entrepreneurs with bank accounts.”

Key differences between closed checkout and open protocol agents

Closed AI checkout (walled garden): Merchants must be approved by the platform; agents can only operate within a whitelist; the platform controls the business traffic entry point.

Open protocol AI agents: Agents can independently discover and evaluate any merchant, completing transactions under optimal conditions without prior approval from intermediaries.

Representative infrastructure: Coinbase’s x402 protocol, and the machine payment protocol (MPP) developed in collaboration with Tempo and Stripe.

The ironic beauty of advertising: the birth of a 10 trillion token dataset that ends its own existence

Ragsdale makes a core observation: “Advertising created a free and open internet; the internet became a dataset of 10 trillion tokens, which in turn gave rise to LLMs, ultimately leading to the decline of advertising—there’s a beautiful irony in this.”

His conclusion is that advertising, this “ingenious hacking method,” has permanently changed the internet in the past, but by 2026, “this hacking method is dying out.” He believes that open Agentic AI commerce supported by protocols like x402 or MPP is the core direction of the next phase of internet business logic.

Frequently Asked Questions

Why does Agentic AI pose a fundamental threat to online advertising?

The core logic of online advertising is “disrupt human attention to generate commercial value.” When shopping decisions shift from humans to AI agents, ads lose their target—AI agents are unaffected by ads and execute optimal decisions based solely on instructions. As a result, the advertising model fundamentally fails.

What roles do x402 and MPP play in Agentic AI commerce?

x402 is an open payment protocol developed by Coinbase, allowing AI agents to complete transactions independently without relying on centralized platform permissions. MPP (Machine Payment Protocol), developed in collaboration between Tempo and Stripe, is another key infrastructure supporting open Agentic AI commerce, differing from the current “walled garden” checkout models.

What are the limitations of current AI instant checkout features (like ChatGPT shopping)?

Current AI checkout functions require merchants to be approved by the platform, and agents can only operate within a whitelist of merchants. The platform controls the entire business traffic entry point. Ragsdale sees this as merely a replacement for the old advertising model, not true open agent commerce.