Amazon is upgrading its decade-old Alexa voice assistant with generative artificial intelligence and plans to charge a monthly subscription fee to offset the cost of the technology, according to people with knowledge of Amazon’s plans.
The Seattle-based tech and retail giant will launch a more conversational version of Alexa later this year, potentially positioning it to better compete with new generative AI-powered chatbots from companies including Google and OpenAI, according to two sources familiar with the matter, who asked not to be named because the discussions were private. Amazon’s subscription for Alexa will not be included in the $139-per-year Prime offering, and Amazon has not yet nailed down the price point, one source said.
Amazon declined to comment on its plans for Alexa.
While Amazon wowed consumers with Alexa’s voice-driven tasks in 2014, its capabilities could seem old-fashioned amid recent leaps in artificial intelligence. Last week, OpenAI announced GPT-4o, with the capability for two-way conversations that can go significantly deeper than Alexa. For example, it can translate conversations into different languages in real time. Google launched a similar generative-AI-powered voice feature for Gemini.
Some interpreted last week’s announcements as a threat to Alexa and Siri, Apple‘s voice assistant feature for iPhones. NYU professor Scott Galloway called the updates the “Alexa and Siri killers” on his recent podcast. Many people use Alexa and Siri for basic tasks, such as setting timers or alarms and announcing the weather.
The development of new AI chatbots in recent months has increased the pressure internally on a division that was once seen as a darling of Amazon founder Jeff Bezos, according to the sources — but has been subject to strict profit imperatives since his departure.
Three former employees pointed to Bezos’ early obsession with Alexa, describing it as his passion project. Attention from Bezos resulted in more dollars and less pressure to make a return on those funds immediately.
That changed when Andy Jassy took over as CEO in 2021, according to three sources. Jassy was charged with rightsizing Amazon’s business during the pandemic, and Alexa became less of a priority internally, they said. Jassy has been privately underwhelmed with what modern-day Alexa is capable of, according to one person. The Alexa team worried they had invented an expensive alarm clock, weather machine and way to play Spotify music, one source said.
For instance, Jassy, an avid sports fan, asked the voice assistant the live score of a recent game, according to a person in the room, and was openly frustrated that Alexa didn’t know an answer that was so easy to find online.
When reached for comment, Amazon pointed to the company’s annual shareholder letter released last month. In it, Jassy mentioned that the company was building a “substantial number of GenAI applications across every Amazon consumer business,” adding that that included “an even more intelligent and capable Alexa.”
The team is now tasked with turning Alexa into a relevant device that holds up amid the new AI competition, and one that justifies the resources and headcount Amazon has dedicated to it. It has undergone a massive reorganization, with much of the team shifting to the artificial general intelligence, or AGI, team, according to three sources. Others pointed to bloat within Alexa, a team of thousands of employees.
As of 2023, Amazon said it had sold more than 500 million Alexa-enabled devices, giving the company a foothold with consumers.
Alexa, were you too early?
Apple, Amazon and Google were early movers with their voice assistants, which did employ AI. But the current wave of advanced generative AI enables much more creative, human-sounding interactions. Apple is expected to unveil a more conversational Siri at its annual developers conference in June, according to The New York Times.
Those who worked on the Alexa team describe it as a great idea that may have been too early, and that it’s going to be hard to turn the ship around.
There’s also the challenge of finding AI engineering talent, as OpenAI, Microsoft and Google recruit from the same pool of academics and tech talent. Plus, generative AI workloads are expensive thanks to the hardware and computing power required. One source estimated the cost of using generative AI in Alexa at 2 cents per query, and said a $20 price point was floated internally. Another suggested it would need to be in a single-digit dollar amount, which would undercut other subscription offerings. OpenAI’s ChatGPT charges $20 per month for its advanced models.
Still, they point to Alexa’s installed user base, with devices in hundreds of millions of homes, as an opportunity. Those who worked on Alexa say the fact that it’s already in people’s living rooms and kitchens makes the stakes higher, and mistakes more costly if Alexa doesn’t understand a command or provides unreliable information.
Amazon has been battling a perception that it’s behind in artificial intelligence. While it offers multiple AI models on Amazon Web Services, it does not have a leading large language model to unseat OpenAI, Google or Meta. Amazon spent $2.75 billion backing AI startup Anthropic, its largest venture investment in the company’s three-decade history. Google also has an Anthropic investment and partnership.
Amazon will use its own large language model, Titan, in the Alexa upgrade, according to a source.
Bezos is among those who have voiced concern that Amazon is behind in AI, according to two sources familiar with him. Bezos is still “very involved” in Amazon’s AI efforts, CNBC reported last week, and has been sending Amazon executives emails wondering why certain AI startups are picking other cloud providers over AWS.
Wednesday’s announcement, which came alongside a set of sweeping new tariffs, gives customs officials, retailers and logistics companies more time to prepare. Goods that qualify under the de minimis exemption will be subject to a duty of either 30% of their value, or $25 per item. That rate will increase to $50 per item on June 1, the White House said.
Use of the de minimis provision has exploded in recent years as shoppers flock to Chinese e-commerce companies Temu and Shein, which offer ultra-low cost apparel, electronics and other items. The U.S. Customs and Border Protection has said it processed more than 1.3 billion de minimis shipments in 2024, up from over 1 billion shipments in 2023.
Critics of the provision say it provides an unfair advantage to Chinese e-commerce companies and creates an influx of packages that are “subject to minimal documentation and inspection,” raising concerns around counterfeit and unsafe goods.
The Trump administration has sought to close the loophole over concerns that it facilitates shipments of fentanyl and other illicit substances on the claims that the packages are less likely to be inspected by customs agents.
Temu and Shein have taken steps to grow their operations in the U.S. as the de minimis loophole has come under greater scrutiny. After onboarding sellers with inventory in U.S. warehouses, Temu recently began steering shoppers to those items on its website, allowing it to speed up deliveries. Shein opened distribution centers in states including Illinois and California in 2022, and a supply chain hub in Seattle last year.
Apple CEO Tim Cook, center, watches during the inauguration ceremonies for President Donald Trump, right, and Vice President JD Vance, left, in the rotunda of the U.S. Capitol in Washington, Jan. 20, 2025.
Shawn Thew | Afp | Getty Images
Apple slid more than 6% in late trading Wednesday and led a broader decline in tech stocks after President Donald Trump announced new tariffs of between 10% and 49% on imported goods.
The majority of Apple’s revenue comes from devices manufactured primarily in China and a handful of other Asian countries. Nvidia, which manufactures new chips in Taiwan and assembles its artificial intelligence systems in Mexico and elsewhere, fell about 4%, while electric vehicle company Tesla dropped 4.5%.
Across the rest of the megacap universe, Alphabet, Amazon and Meta all dropped between 2.5% and 5%, and Microsoft was down by almost 2%.
If Apple’s postmarket loss is matched in regular trading Thursday, it would be the steepest decline for the stock since September 2020.
Trump on Wednesday afternoon said the new taxes on imported goods would be a “declaration of economic independence” for the country. He announced a 10% blanket tariff on all imports, and higher duties for specific countries, including 34% for China, 20% for European nations, and 24% for Japanese imports, based on what tariffs they charge on U.S. exports, Trump said.
“We will supercharge our domestic industrial base, we will pry open foreign markets and break down foreign trade barriers,” Trump said during his speech. “Ultimately, more production at home will mean stronger competition and lower prices for consumers.”
During his speech, Trump praised Apple, Meta, and Nvidia for spending money and investing in the United States.
“Apple is going to spend $500 billion, they never spent money like that here,” Trump said. “They’re going to build their plants here.”
The Nasdaq just wrapped up its worst quarter since 2022, dropping 10% in the first three months of the year, though the tech-heavy index rose in each of the first two days of the second quarter.
Guests including Mark Zuckerberg, Lauren Sanchez, Jeff Bezos, Sundar Pichai and Elon Musk attend the Inauguration of Donald J. Trump in the U.S. Capitol Rotunda on January 20, 2025 in Washington, DC. Donald Trump takes office for his second term as the 47th president of the United States.
Julia Demaree Nikhinson | Getty Images
Amazon submitted a bid to the White House to purchase the social media app TikTok from its Chinese owners, CNBC has confirmed.
The company sent its proposal in a letter this week to Vice President JD Vance and Commerce Secretary Howard Lutnick, according to a source familiar with the matter who asked not to be named because the discussions are confidential. The parties aren’t treating the bid seriously, however, given that it was submitted just days before a deadline staving off a U.S. ban is set to expire, the person said.
Amazon declined to comment.
The e-commerce company’s offer, which was first reported by The New York Times, comes as TikTok’s fate in the U.S. is up in the air. The short-form video app faces another potential shutdown in the U.S. on April 5 if ByteDance, its parent company, can’t reach a deal to divest TikTok’s American operations. Lawmakers passed a bill last year setting a Jan. 19 deadline for the sale, but Trump signed an executive order granting a 75-day extension for a potential deal.
Trump could announce a decision on TikTok’s fate in the U.S. as soon as Wednesday, sources familiar with the situation told CNBC’s David Faber. Mobile technology company AppLovin has also made a bid for TikTok, Faber reported separately, citing sources familiar with the matter.
TikTok has emerged as a major hub for e-commerce as it has poured money into growing its online marketplace, called TikTok Shop. TikTok’s lucrative marketplace, coupled with the app’s more than 170 million users, could be an attractive asset for Amazon. Following TikTok’s success, Amazon launched and then shuttered a short-form video service of its own.
Last August, the two companies formed a partnership that allowed TikTok users to link their account with Amazon and make purchases from the site without leaving the app. The deal attracted scrutiny from lawmakers who were concerned about its potential national security risks.