This Week in M&A Issue #206

OpenAI’s new Instant Checkout feature is transforming ChatGPT from a conversational AI into a serious competitor for Amazon’s most profitable business segment, according to Marketplace Pulse.

OpenAI’s Instant Checkout is a new feature that lets users buy products directly within ChatGPT without leaving the conversation. It combines real-time product information, pricing, and availability from partnered merchants, creating a seamless, one-stop shopping experience entirely inside ChatGPT.

With 700 million weekly users sparking around 75.6 million product-related conversations, ChatGPT is essentially becoming a marketplace handling nearly 4 billion product queries a year. Even with modest assumptions, just 2% of conversations converting into $70 purchases, Instant Checkout could generate $5.5 billion annually, about half of Etsy’s global marketplace.

The bigger impact isn’t just sales. Amazon’s $56.2 billion ad business relies on sellers paying for visibility in a crowded ecosystem. ChatGPT offers something Amazon no longer does at scale: organic, unpaid product discovery. Shoppers can describe their needs in detail, uncovering niche products that keyword searches often miss. This helps buyers find exactly what they want while giving sellers exposure without ad spend.

Through OpenAI’s integration with Etsy and over one million Shopify merchants, OpenAI gains a rich dataset of preference-driven queries that could power future advertising algorithms, potentially creating a lucrative long-term revenue stream.

While the immediate GMV impact is modest compared to Amazon’s $600 billion third-party marketplace, ChatGPT represents a rapid, unexpected threat. In just months, it has created a new way for shoppers to discover and buy products, directly challenging a system Amazon has built over 25 years.

ChatGPT’s Instant Checkout may not yet match Amazon’s scale, but for Amazon sellers, the era of guaranteed discovery through paid placement may be under serious pressure.

OpenAI is taking ChatGPT to a whole new level with a series of exciting updates that make the platform more interactive, practical, and powerful.

One of the biggest additions is “Apps in ChatGPT,” which lets users access third-party apps like Spotify, Canva, Zillow, Expedia, and Figma directly within ChatGPT conversations. Instead of switching between apps, users can interact with these tools as part of the chat, for example asking Figma to turn a sketch into a diagram or having Booking.com suggested automatically during travel discussions. OpenAI describes this as a step toward a “conversational operating system,” where software and services are accessed seamlessly through a single interface.

This could turn ChatGPT into a powerful marketing channel. With over 800 million users, brands can now appear at the exact moment of intent, offering contextual discovery rather than traditional search-based exposure. The Apps SDK allows interactive and visual experiences, such as Zillow showing real estate listings with maps directly in chat or Canva enabling design work in real time.

OpenAI plans to expand the platform with more integrations, including Target, Uber, Peloton, and Instacart. Developers can begin building apps now, with an app store and user reviews coming later this year. High-quality apps will receive better visibility, encouraging innovation and polished experiences.

In addition to app integrations, OpenAI recently launched AgentKit, a toolkit that makes it faster and easier for businesses to build and deploy AI agents without coding. With a visual drag-and-drop interface, developers can design workflows, connect tools, test logic, and add safety guardrails all in one place.

These new tools turn ChatGPT into a unified space for interaction, discovery, and potentially commerce, giving marketers a chance to meet users at the moment of action, rather than waiting for them to search.

The market for AI avatars is rapidly expanding, with apps like Character AI capturing the spotlight.

Unlike traditional apps, Character AI lets users chat with AI avatars that have unique personalities, ranging from heroic and mischievous to quirky and loyal companions. This growing interest in AI-powered interactions has even sparked comparisons to dating apps, as people increasingly seek connection through AI.

Character AI’s growth highlights just how big the opportunity is. According to data from AppFigures, the app’s net revenue doubled this year, surpassing $1 million per month in August after app store fees. Since its launch, Character AI has generated roughly $11.5 million in revenue from 57 million downloads across the App Store and Google Play. While the majority of revenue comes from the U.S., the app is quickly gaining traction in other countries, signaling a global appetite for AI avatars.

Search results back this up. Searches for “AI Avatar App” reached 42K last month, up a whopping 534% in the last quarter alone.

For developers, the market’s rapid growth is both exciting and challenging. While jumping in immediately may not make sense for everyone, the demand for AI-powered experiences shows no signs of slowing. Success in this space will depend on understanding user behavior, identifying gaps, and leveraging data to create avatars that truly resonate.

The real question isn’t whether to build an AI avatar, but which type of AI experience to prioritize in an increasingly competitive landscape.