This is the AI moment. Artificial intelligence is poised to transform the entire economy by redefining how people and businesses interact within society. It is triggering a sweeping and rapid reconfiguration of competition dynamics that compels firms, government agencies, and governments to adapt—or risk irrelevance.

Much like electricity, AI is redefining economic competition. Countries are securing vast investments in AI infrastructure, from chips to data centres. Since January, Europe has unveiled a €200 billion public-private investment initiative, while the United States has pledged over €1.39 trillion from private firms, including OpenAI, Apple, TSMC, and Nvidia.

These investments are fuelling the rapid development and deployment of AI models and applications across sectors. But the impact goes beyond economics. AI shapes new forms of interaction. Search engines offer a revealing case study of these dynamics.

For years, they delivered lists of links from publishers in response to user queries. The first wave of generative AI began to alter this by offering direct answers, often accompanied by links to the sources. Now, as AI agents advance, search engines are evolving again, becoming tools that can perform personalised tasks on a user’s behalf, such as booking a trip or purchasing goods.

The implications are profound. Search costs may plummet, but users could face heightened consumer risks, such as fake content and fraud, as AI can produce inaccurate content and be manipulated by malicious actors. Meanwhile, publishers find themselves on uncertain ground. On one hand, partnerships with AI firms to license their content for AI training and retrieval offer new revenue streams. On the other hand, if users only interact with AI-generated content without clicking on source links, publisher traffic and ad revenue could significantly drop.

The web must evolve quickly to meet the needs of the agentic world. AI agents require a reimagined architecture to navigate websites and interact with other agents effectively and seamlessly. Microsoft is already championing a new open standard for this evolution.

Publishers, too, must rethink their business models. With less traffic from search engines, they risk losing both user reach and ad revenue, which is particularly critical for newsrooms that rely on user eyeballs to generate revenue from advertising. In the short term, expect more licensing deals with AI firms to secure revenue. Over time, publishers will need to offer distinctive content that AI cannot produce. Building direct relationships with users through apps, newsletters, or social media will become more essential than ever.

Platforms that act as intermediaries between users and businesses, such as booking platforms, are not immune. general AI agents may bypass them altogether, transacting directly on company websites. Moreover, if agents can identify and select the most relevant option without human intervention, platform features that rely on user eyeballs, such as advertising or sponsored listings, may become irrelevant. To stay relevant, platforms like Expedia are embedding their own AI agents and partnering with AI developers to work with general AI agents, such as OpenAI operator.

The digital advertising industry also faces an existential rethink. Today, ads work by catching the user’s eye, leading to view impressions that could result in click conversions. But in an agentic web, the user is no longer present. AI agents browse the web without interacting with ads as humans do. The ad industry must reinvent its logic when showing ads, focusing on moments when agents require human intervention, such as during checkout.

As AI transforms the economic landscape, governments must move swiftly to keep pace. Legislative reforms should be grounded in evidence, drawing on sector-specific analysis to understand AI’s impact. Core frameworks, competition policy, data protection, consumer rights, and intellectual property may require thoughtful adaptation to address new challenges posed by AI technologies.

Beyond regulation, policymakers must actively support AI adoption. This includes spurring demand through public procurement, designing investment-friendly regulatory environments, and fostering skills development. Public campaigns and targeted training programmes can help equip both individuals and businesses with the capabilities needed to harness AI effectively.

Government agencies also have a vital role in promoting responsible innovation. The UK’s AI and Digital Hub, which offers informal guidance from multiple regulators, is one model. Regulatory sandboxes, which enable firms to test new technologies safely within defined parameters, are also crucial to ensure rapid development. Such initiatives ensure that innovation is not only encouraged but also responsibly implemented with legal certainty.

The AI moment is not just a technological shift. It is an entire economic and societal transformation that will shape the future of countries.