Google launches AI-based shopping in Canada in race to dominate e-commerce

Google launched a new tool in Canada on Wednesday that will let users buy things with an AI chatbot, essentially eliminating the role of the e-commerce checkout cart.

American users gained access to the tool, called the Universal Commerce Protocol (UCP), on Oct. 15.

The feature is the California-based company's latest salvo in a fierce battle to control e-commerce, as tech companies race to turn conversational AI into digital points of sale.

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While retail giants like Amazon and Walmart have introduced AI assistants that are effectively confined to their own platforms, Google is competing with agents like Meta’s Muse that can work across different online sites.

Both companies — Meta and Alphabet — are seeking to become the universal checkout counter for internet retailers, meant to help shoppers avoid re-entering their payment details across multiple storefronts.

As of Wednesday, shoppers can buy items they discover across Google Search through a conversation with its Gemini chatbot. Purchases will be processed through Google Pay using shipping and payment details saved in Google Wallet. The individual retailer, not Google, remains the seller of record, taking full legal responsibility for fulfilling the order.

Eric Morris, head of retail at Google Canada, calls the new feature "a new way for Canadians to shop."

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For now, Google’s offering is limited to a handful of Canadian retail partners — Lululemon, Shoppers Drug Mart, Simons and select Shopify merchants, with more expected in the new year.

Shopify is both Google's partner and its rival. The Ottawa-based company helped build Google’s in-chat checkout, even as it rolls out competing AI shopping tools of its own.

"AI is changing the way that consumers search," Google Canada's Morris told CBC News. 

And Google, best known for its search engine, is acutely exposed to that change. Last Thursday, shares of its parent company Alphabet plunged by double-digits, erasing roughly $500 billion US in market value in a single trading session, after the company booked weaker-than-expected search and advertising revenue.

"In the old days, you might go to Google and search for running tights, and you’d get 10 blue links and pictures of different products," Morris said, describing the company's legacy search experience.

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Shopping with AI is a lot more conversational, he says. That same query for running shoes to a chatbot might go something like this:

If a user asks, "What are the best running types for a cold, snowy Toronto winter?"

"In that chat interface, you'd be presented with a series of options and products based on what you were searching for, and our ability to predict the products that most likely match," he said.

He notes that access to Google's UCP service will be free for retailers.

Choices 'more constrained' with AI shopping

A leading Canadian policy expert says this new style of shopping gives companies like Google and Meta access to transaction and purchase data that would otherwise be in the hands of individual retailers.

Vass Bednar, managing director at the Canadian SHIELD Institute for Public Policy, also questions whether AI can be trusted to prioritize specific consumer needs, like finding the lowest price. 

"What the research is starting to show is that in an AI shopping context, choice is more constrained than on the open web," she said. 

"The potential risk or trade-off is that you’re not actually getting the best quality or cheapest price.… You’re getting an offer that is served to you through an advertising relationship."

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However, a representative from the Retail Council of Canada said the feature can allow budget-conscious consumers to find deals and compare prices more easily. 

"I think it's a positive, because it helps people feel more prepared," said Santo Ligotti, the council’s vice-president of membership and marketing.

"There's always gonna be the fear of inaccurate information, if it's sponsored or biased … but the more that Canadians use it, and the more the companies are allowing themselves to be more discoverable on AI, the more I think we're going to see this as just another tool in the toolkit to help people plan on how they want to spend."

However, while agents may help people find items quicker, users should not assume they are always being provided the absolute lowest price, said David Soberman, a marketing professor at the University of Toronto’s Rotman School of Management.

"I definitely recommend that people do a lot of cross-checking, because sometimes these AI agents miss things."

Retailers becoming 'passive players,' says U of T prof

Like Bednar, Soberman sees more control shifting into the hands of big tech.

"The amalgamation of a search engine with AI agents in general has made the retailers sort of passive players in this whole ecosystem," he said. 

Google Canada expects 59 per cent of Canadians to use an AI tool for their holiday shopping this year. Figures from Deloitte and PwC are softer — 39 per cent, and 28 per cent, respectively.

Last week, some of Canada’s largest banks announced plans to block third-party AI agents from accessing their clients' online bank accounts and other information, citing safety and security concerns.

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Morris says Google isn’t worried.

"It's still humans making the purchase. No one else," he said. "The way it works is that the transaction is secure and encrypted. You'd buy securely using Google Pay."

Meanwhile, Nick Engel, Lululemon’s senior vice-president of global digital experience, says he expects agentic AI shopping will be a hit with fans of the Vancouver-based activewear brand.

"I think we are going to see a wave of guests using [large language models] for both discovery, and then for shopping, this holiday season," he said.

"Banks are obviously going to have very different standards than retailers."