The global internet advertising market is worth roughly $291 billion in 2025, with Google dominating. But Sam Ragsdale, co-founder of Merit Systems under a16z Crypto, warns that AI agents simply do not look at ads — the entire “attention interception” model that sustains the web is collapsing.
Ragsdale characterizes the past three decades as the “distraction business model” era. Since 1997, advertisers paid not for product exposure but for split-second user attention — attention that ads themselves manufactured as interruptions. That model gave us free search engines, social platforms and news sites, building today's open internet. He highlights an ironic feedback loop: ads funded the free web, the web generated the 10-trillion-token datasets that trained large language models, and those same LLMs now spell the end of advertising. Ads were “a clever hack,” but by 2026 “that hack is dying,” he says.
AI Platforms Move Fast: ChatGPT and Gemini's Walled Gardens
ChatGPT and Gemini have already rolled out in-chat checkout for U.S. users, letting them purchase items directly within the conversation window. It looks like a first step toward agentic commerce, but Ragsdale argues it remains a walled garden: merchants must pass strict approval processes, and consumers can only buy what the platform decides to offer. For businesses, it's just swapping Google ad auctions for another set of access rules; for users, the AI agent's “freedom” remains constrained by platform boundaries.
Open Protocols as the Genuine Breakthrough: x402 and MPP
Ragsdale drives the point home with a metaphor: “An AI agent that can only buy from pre-approved merchants is like an employee with a corporate card limited to three specific vendors; an AI agent with open protocols is an entrepreneur with a bank account.” He argues that the key is enabling AI agents to autonomously explore goods using open protocols. Two frontrunners: Coinbase's x402 protocol, built on the HTTP 402 status code, allows AI agents to complete payments without human intervention; and Tempo's Machine Payments Protocol (MPP), developed with Stripe, tailored for machine-to-machine automated transactions.
This structural shift in advertising opens a critical door for crypto and Web3. AI agents need permissionless, programmable payment infrastructure — exactly what blockchain protocols excel at. The rise of protocols like x402 means each future transaction by an AI agent could run on decentralized rails rather than being locked into big platforms' private checkout systems. Ads funded the web, the web trained AI, and AI is now killing ads — once that loop completes, the next target for reinvention will be the entire e-commerce and payments stack.