The Business of Personal AI Agents

Caught My Eye…

1) The Business of Personal AI Agents

Meta built its September Connect event around Muse, the personal AI agent it launched on September 8. Muse runs on its own computer in Meta's cloud and keeps working after you close the app. Ask it for a product, and it finds one and checks out, logging in as you. It reached No. 1 on the US App Store and has passed 3.4 million downloads.

At Connect, Meta added Walmart, Best Buy, Sephora, and Wayfair as partners, and Shopify's Shop Pay is being added at checkout alongside the Stripe payments Muse launched with. Muse has a free tier and paid plans at $20 and $100 a month. Zuckerberg says Meta will keep it free for "a huge number of tokens," with the expectation that "over time we will profit by taking a small fee from transactions."

Personal AI agents are quickly becoming their own market, and they are being built in very different ways. OpenClaw and Hermes Agent are free, open-source programs that connect an AI model to your browser and your apps. You set one up on your own computer or a rented server, pay for the AI model yourself, and message it over WhatsApp or Telegram. It keeps working in the background for as long as that machine stays on.

Muse, xAI's Grok Bot, OpenAI's ChatGPT Work, and Instinct do the same kind of work on the companies' own computers. Instinct, a startup whose assistant you text or call, has gone a step further: its agents can talk directly to each other, coordinating things like group trips across everyone’s calendars, arrival times, and plans without the usual back-and-forth. It raised $250 million at a $2.5 billion valuation in August, bringing its total to $350 million, and is reportedly in talks to raise at a $10 billion valuation.

Agents are splitting companies into two camps: those that want to own the customer's screen, and those happy to work behind someone else's agent. Amazon is in the first camp. It made $19.8 billion from ads in the second quarter, including the sponsored listings shoppers see as they browse, and on September 20 it began blocking Muse from its store. Shopify is in the second. It earns when a sale happens, wherever the shopper started, and it plugged its checkout into Muse.

Since Muse launched, Meta's stock is up about 22%, while companies like TripAdvisor, Bookings, Planet Fitness, and The New York Times fell. Expedia and Instacart are also down despite joining as partners, while Shopify, which runs the checkout, rose 11.4% in the week of Connect.

AI agents like Grok Bot and Muse will do two things. First, they'll force the big companies with agentic services of their own to block third-party agents, because agents bring price discovery and transparency, and that's bad for anyone who profits from opacity and breakage, like the subscription that's impossible to cancel. Second, they put the App Store and its 30% revenue share on notice. When a service can run headless, with no app screen of its own, and an agent transacts for you with payment info built in, an app store owner may have fewer reasonable claims to a cut.

2) Data Centers Hit a Permit Wall

On September 24, Bloomberg reported that Oracle had sent a force majeure notice on Project Jupiter, a 2.45-gigawatt data center campus it is leasing in New Mexico. Force majeure is a contract clause that lets a party delay its obligations when something outside its control gets in the way. Oracle says notices like this preserve its contractual rights, and that the project "remains on our planned schedule."

The issue is power. The campus is designed to run on gas-powered fuel cells from Bloom Energy, fed by a 17-mile pipeline. New Mexico's State Land Office refused to let 0.6 miles of that pipeline cross state land, calling the burden on the state's water and communities "extreme," and the pipeline is now about six months late.

A state air permit for the fuel cells is still pending. If the notice holds, Oracle can delay the start of full rent by up to three years. It still owes the rent, but the developer gets paid later, and the $18 billion construction loan behind the project gets longer and riskier. That loan now trades below 90 cents on the dollar.

The two largest states tightened their rules the same week. On September 21, Texas Governor Greg Abbott ordered the state's environmental regulator to stop issuing data center permits until audits of the grid and water supply are done. His conditions require data centers to pay all their own electrical infrastructure costs and to lower residents' bills. That afternoon, California Governor Gavin Newsom signed seven bills requiring data centers to report their energy and water use, pay for their own grid upgrades, and cover a larger share of wildfire costs.

Energized land with a signed interconnection is the one input in this buildout that can't be manufactured on demand, and as data centers meet more local resistance, a site that is already permitted and powered becomes more valuable.

3) Treasury Yields Hit Their Highest Since 2007

The US government now pays ~5.18% to borrow for 10 years, the most since 2007, and 5.5% to borrow for 30 years, the most since 2004.

That rate is the base price of money. Mortgages, business loans, and what investors expect to earn on stocks are all set off it, so when it goes up, everything costs more to finance. The average 30-year mortgage is now 7.03%.

So why is the government suddenly paying so much more? A 10-year yield is roughly what investors expect short-term interest rates to average over the next decade, plus extra pay for tying their money up that long.

The economy is running hot: a September survey showed US businesses growing at their fastest pace in more than five years. The Fed raised rates on September 16 for the first time in three years, and markets now expect rates to stay higher for longer.

Investors also want to be paid more to lend for longer. The 10-year real yield rose from 2.68% on September 18 to 2.85% on September 24, while the inflation rate they expect over the next decade stayed near 2.35%. In other words, buyers aren't bracing for inflation so much as asking for a better deal.

The government's September 23 sale of five-year bonds drew its weakest demand since 2018. On August 19, the Treasury announced it would double its buybacks of long-term bonds starting September 9, which it describes as support for trading in those bonds rather than an attempt to set rates. The 30-year yield has since climbed from 5.19% to 5.49%. The US can still sell all the debt it needs to, but it is paying the most since 2007 to do it.