Why Does Agentic Commerce Need Contracts? Nitin Badjatia on MyTerms and Consent

Andreas Welsch: One of the buzzwords that’s gaining more momentum in the last couple of weeks and months is agentic commerce. And we’ve already talked about how we can debunk the most common myths about agentic commerce, but today we’ll actually talk about why we need contracts now when we engage in agentic commerce. So, let’s jump right in.

Andreas Welsch: Hello, hello. Welcome back to another episode of What’s the Buzz where leaders share how they have turned hype into outcome. Today we’ll talk about why agentic commerce now needs contracts and why we need contracts as individuals when we use agents. And who better to talk about it than someone who has spent their entire career in the customer experience space, Nitin Badjatia. Hey, Nitin. Thank you so much for joining.

Nitin Badjatia: Thanks, Andreas. It’s great to connect on this as well as reconnect, generally speaking.

Andreas Welsch: Yeah, reconnect’s actually good, right? We’ve spent quite some time together at SAP while we were still there. Now we’re both independent. And not too long ago we touched base again, and there’s so much happening in this space, whether it’s CX or now also agentic AI, wouldn’t it be good to compare notes and share what we’re each seeing. So that’s why we’re here. But maybe Nitin, for those members in the audience who don’t know you quite as well as I do, can you share a little bit about yourself, who you are and what you do?

Nitin Badjatia: Sure. Professionally, I’ve been in the enterprise software space for almost three decades. Ended up in software almost by chance. Ex-banker, actually, in institutional banking, not the cool investment banking side, but doing global syndicated risk and things like that. And pivoted over into technology. My first run was at Oracle of all places, right? Although I was in New York City at the time. Oracle, and then I was called by a company you might have heard of called Siebel Systems to come over. Again, not out here in California where I am based, but in New York City. All in the financial services practice, and slowly meandered through that world and eventually left and went into knowledge management, which I would call a precursor to AI in the sense that we were using machine learning algorithms all along. In fact, in the customer service space we used to call them case-based reasoning. And it was a neural engine that ran some of that logic. But it also tells you how much we’ve come in the last 25 years: our biggest customers back then were Cingular Wireless, which is now AT&T, and the US Department of Defense. What do those two have in common? They have unlimited budget, unlimited compute. Well, the good thing for all of us today is that both of those have shrunk. So your average mom and pop can have access to maybe not unlimited compute and maybe not unlimited budget, but access to the same or similar AI. And from there I went back into larger businesses. I was at ServiceNow as part of the customer workflows team. We built a fantastic product there, great success. And then SAP called and I was at SAP along with you for several years with the CX portfolio solution management, where we did a bunch of innovation around sales and service and really set the foundation for how SAP also thinks about AI in those worlds. I was involved in that. I didn’t build it, but it’s fascinating to watch another large enterprise software vendor try to understand how customers need AI and how you deploy it.

Andreas Welsch: I think that’s the key point, and I think now, being independent, you have a different perspective on how software works, how the industry works, and looking at this through a more robust lens, I would say, as many are looking through it when we think about consumers or just consumer-type customers in that sense. So that’s why I’m so excited to talk about it with you, and I even learned a thing or two about you in the last couple of minutes too. That’s always good. But hey, in good old fashion, why don’t we kick it off with a little question? So I at least told you as much that this is the usual icebreaker. So let’s see. The question is this. When I press the buzzer you see this sentence here: If AI were a color, what would it be? Make it a little more interesting. You have 60 seconds on the clock. So here we go.

Nitin Badjatia: Okay. So thinking about AI and the black box that it largely is to most people. And it just came to me. There’s an obscure color, it’s a proprietary color called Vantablack. It is considered the darkest black ever invented. And so it’s visible but it doesn’t reflect light. And so I’ve seen Vantablack painted on a BMW. And it gives you the weirdest feeling, because you can see that there’s a physical car there, but you can’t see the contours and the reflections. And I think that’s what AI is. I mean, at this point. It’s like Vantablack.

Andreas Welsch: Okay. So you can’t see the reflections but it’s definitely there, right? I love that answer. I’ve heard many different variations in responses to what color it should be, or do you think it is even a rainbow. But this shade of black is something new.

Nitin Badjatia: Yeah, so when you free up, ask your favorite about Vantablack. It’s very interesting.

Andreas Welsch: Awesome. Fantastic. So folks, if you are in the audience and you’re just joining the stream, drop a comment in the chat where you’re joining us from. I’m always curious to see how global our audience is. And if you want to learn about how we can encourage and empower your employees to use AI and use it well without creating slop, consider picking up a copy of my new book, The HUMAN Agentic AI Edge, on Amazon and pretty much anywhere you get your books. So with that out of the way, let’s see. There’s so much happening. I don’t even know where to start. And before we came on we already had a good conversation about this topic of agentic commerce and contracts, and I feel it’s so innocently discussed, this topic of agents as a technology layer, as pieces of software that act on your behalf, that we miss a very critical point in that, which is consent, that is, what are we actually agreeing to, what are agents agreeing to on our behalf. You’ve written quite a bit about that on your Substack. So I thought maybe you can share a little bit more about what you’re seeing from your vantage point, whether it’s agentic commerce or the agentic web as a broader term. Why do we need contracts? Where are we right now?

Nitin Badjatia: Yeah. I think let me start with the beginning. Credit where credit’s due. Throughout my career in enterprise software, we’ve always built some very successful businesses, had success with our customers. But there’s one thing that bothered me about the space, which was this notion that we were collecting data without getting explicit permission from customers. Now, for the most part, I’m not talking about ad tech. Ad tech is a whole other space and it has problems. But along the way I came across a legend in the industry, Doc Searls, who was one of the authors of the Cluetrain Manifesto in the late ’90s. He had been working on a project called Project VRM, which is obscure, but at the Berkman Klein Center at the Harvard Law School. And the entire premise of it was how do individuals secure privacy on the web in the same way that we have it in the natural world. This was 2007, 2008. And in fact, many of us in the CRM world ended up at Harvard Law School because Doc had invited us to come defend ourselves. And I joke with Doc nowadays that we all showed up with our pitchforks in hand to say we’re not the ones causing the problem. And actually emerged out of those days at the law school fully aligned, saying part of the data challenge of CRM is not good data, because it’s based off surveillance. It’s not based off what I proffer. And so that kicked off a journey. Project VRM kind of graduated from Harvard, became a non-profit called Customer Commons, which I sit on the board of, full disclosure. And we’ve been pursuing a path to how do we make this happen? Well, although I was not directly involved in this, various other board members and others were involved in creating a new standard which has been set forth by IEEE. It went live this January. It’s IEEE 7012, which is the formal term, but we call it MyTerms. And MyTerms really says that consent is not equal to contract. The web we’ve built to date is based off this notion of a terms of service. And the terms of service is usually, before I even tell you what I can do and what I can offer you, you need to agree to everything that I’ve said. In the physical world, that just doesn’t happen. You don’t walk into a Trader Joe’s where, before you enter the door, they say, well, you need to agree to everything we’re going to do and track you before you can buy your weekly ration of cookie butter. And if you know Trader Joe’s, that stuff’s hard to find. And I use Trader Joe’s as an example because I think they’re a perfect example of a successful business in the physical world in that they don’t have a loyalty program. They’re not inserting tracking beacons on your head as you walk around and walk back out. We know that the digital commerce world has done that over the last couple of decades. But that’s also a factor of the fact that it’s only been a couple of decades that we’ve been online. With the arrival of the agentic world, the idea of a contract, or essentially a customer being the first party in a transaction, has become super critical. And so the timing, although when we started this process we couldn’t have predicted the rise of agentic AI, it is now here. So now you can imagine a world where your agent, my agent goes out into the world and is acting on our behalf. Well, there’s multiple things. First of all, the instruction: go find me the best deal on a bathroom fixture. And they can scour and do that stuff. But if you’re a recipient, you want to know that that agent is operating on the fiduciary constructs of the person that put it out into the digital world, but is also carrying contract capabilities. And so IEEE 7012, MyTerms, is to say here is a protocol in which this contract, which is taking legalese, putting it into human readable so the average non-lawyer can understand it, but making it machine executable. And so that’s where we’re going, right? I mean, if agents are going to act on our behalf, and right now maybe just one or two, you’re going to have hundreds of agents. For both sides of that to exist in peace, to know that whatever happened was done with the right set of rights, you need to have this new framework. And it’s being developed and it’s not fully there, but it’s super exciting to be a part of, because besides all of that, if you have a contract, you’re also more willing to share more relevant information.

Andreas Welsch: So I think that gets really interesting, because I think last year OpenAI started partnering with PayPal, started partnering with Walmart. A couple weeks ago I got a marketing email from Starbucks that I can now order my latte via ChatGPT. A couple weeks ago, I think OpenAI said, hey, we want to learn more about your banking and your financial assets so we can advise you if you have questions. So there’s more and more of these seemingly little steps that add to a much fuller picture, where I can clearly see that whether it’s consumers or businesses to businesses, in the near future, transacting with the help of agents. We’ve had this vision for quite a long time. You have these agents that organize your travel, whether it’s business travel or travel for leisure. You just tell them where you want to go, it figures out your favorite airline, loyalty program, hotel, ground transportation and whatnot. And while some of that still seems futuristic, some agents can do it already, but certainly when they act on your behalf and you end up with a ticket that’s twice the amount you are willing to pay for, or would have paid for if you executed yourself, it gets hard to dispute it when an agent acted on your behalf. So things like the MyTerms that you mentioned seem to become more and more important and critical there.

Nitin Badjatia: That’s right. And think about it as the equivalent of a financial receipt, right? So when you go buy something, you get a receipt handed back saying this is what transacted. MyTerms is the legal receipt to say this is what we agreed to. And what we’re proposing is that a nonprofit or a neutral party such as Customer Commons, where I sit, or elsewhere, have standard contracts so you can then say this is the contract I want to have for my day-to-day interaction. This is a contract that’s a little more complex. In the same way that Creative Commons does for artistic work today.

Andreas Welsch: Right. Yes. That’s interesting. Like I said, I read the blog post you published, and I was wondering what do you mean by nonprofit? How would that be governed? How can you access the different templates or variations of what you’re willing to share and to disclose, what you’re willing to accept? But something like the Creative Commons, that’s a good analogy. That makes sense.

Nitin Badjatia: In fact, it was Creative Commons that inspired Customer Commons, our initiative. And in fact, Larry Lessig, who was the champion for Creative Commons, actually told me to go down this path. And so this is the path that we pursued.

Andreas Welsch: So, question for you, though. What is the incentive for vendors to play along, to adopt the standard, to adopt a protocol like this, when, like you said, there has been this surveillance-type data gathering and inference going on for a couple of decades? Why give that up? And why say, okay, we commit to honoring these terms and exchanging information here and negotiating? Why do that? Why all of a sudden be better than what the industry has been?

Nitin Badjatia: It’s a question we ponder every single day in this initiative. Now, we have some of the larger standard bearers in the industry not only endorsing it but building and embedding this into their applications. So that gives us hope. Doesn’t give us a guarantee that it’ll be followed, but it gives us hope. And that’s one of the challenges and one of the fun things about doing something that’s really for, I would say, the benefit of everybody. I frame it this way. From my CRM CX lens, the ultimate challenge of executing value for customers is understanding the context that the customer uses your product or service. A surveyed customer is less likely to share context than one that has reached a mutual contractual arrangement. In the same way that you mentioned OpenAI and others now working with the big financial institutions. I’m not willing to share my personal savings and strategy with anybody who says that they’re a financial expert. I want a certified financial planner, somebody who has reached a high bar, and then with them I’ll say, look, here’s where my savings are, this is what I provide for my teenagers’ college years and so on and so forth. That bar should be the standard in the digital world because it is in the physical world. You don’t walk into, again, Trader Joe’s and pay for your cookie butter and then they ask you about your spouse and what they did last night and all of that stuff. It’s just downright creepy.

Andreas Welsch: Right. Yeah. So, another thought that comes to mind there. In the physical world, when you have a contract, whether it’s on paper or PDF or DocuSign or something, there’s usually a back and forth. There’s some redlining. You’re more involved in the process, or maybe your legal representation is. What does it look like when two agents are comparing these terms, and how do you ensure that they still act in good faith for the respective party that they are the proxy for?

Nitin Badjatia: I think that answer will depend, to be very honest, on the geographic and political constructs that you’re operating in. The efforts around My Data Terms in Europe are taking shape in a very different way because, as the old adage goes, the US innovates and Europe regulates. They’re starting with the regulation, working their way down. Lots of good things to be learned there. I think, like all security, vigilance is going to be required. And as the first sets of agents carrying the protocol get out in the world, we’ll learn and we’ll develop, and the goal is that you have an agent that’s acting on your behalf with an evolving, obviously AI is going to be tuning that agent over time as well.

Andreas Welsch: Right. Yeah. So a couple years ago, I read one of the popular negotiation books published through Harvard Business Review. I don’t really remember what the title was, but it was one of the ones where basically the premise is think win-win, grow the pie, don’t be so set on your own position, and don’t think win or lose, but think win-win. So in the sense of win-win, when these agents negotiate terms, and say the vendor says, these are my terms, your agent says, this is what I will agree to, do you see different levels of what an individual or another contracting party is willing to accept, to say, this is the high bar where we’ll start, but this is the minimum that I need to have guaranteed, otherwise I’m not going to agree at all. So some different variations of this.

Nitin Badjatia: Yes. What the standard proposes today, and it’s early days, are five presets, templates of terms today, right? The basic one is called SD base, or essentially service delivery. In other words, I transact with you, you transact with me, and we’re done. You’re not capturing any additional data. It’s like walking into a Trader Joe’s and offering cash. You have the product, you leave. Where we are today in a digital world is on the exact opposite extreme. You land on a random website to buy something, and because they put cookie trackers all over their website, they will follow you forever. And you never read that, or assume you read it, right? And so I think there’s an evolution that will happen, and the negotiation process, it’ll be interesting to see how it evolves. There’s active development underway to build those interaction buses. But we will arrive at a workable equilibrium, and you have to start somewhere.

Andreas Welsch: Starting somewhere, that’s probably a good last question before we wrap it up. But what do you recommend? Where should organizations start looking at this? Who in the organization should familiarize themselves with this new standard? And what are some of the first steps that they should take?

Nitin Badjatia: So, you can go to the IEEE website and download the standard, the IEEE 7012. And probably good reading for an insomniac. We have simplified that with a website called myterms.info. And that’s really for the layperson to understand what’s being built. The first working tools are emerging. And the plan is to put the links to those, because myterms.info is agnostic. It’s not promotional in any which way, except to promote the fact that the individual should have a contract or have more rights over their own identity and data information than they do today.

Andreas Welsch: Fantastic. So what would you say are the key three takeaways that you would want our audience to take away from our conversation today? We’ve covered a lot of ground, from contracts and consent not equaling contracts, to what the standard looks like, where to find it, where this is today, where this is going. What should people take away?

Nitin Badjatia: So I think the number one is not to obsess about the technology. To think about how your real-world physical interactions happen on a day-to-day basis and how simple it can be and why it’s become so complex in the digital world, even though it’s supposedly convenience. Second is to recognize that the terms of service that you inherently agree to aren’t enforceable, but you’re signing away access to more data than you can imagine. And the third, which is kind of the ominous aspect of this, is that this is all temporary. We are in the Precambrian era of technology, really. Two, maybe three decades in. And as humans, we’ve conducted commerce for millennia. And so there’s so much to learn from and bring into the digital world to drive equilibrium, not only for those of us who are successfully living in this world, but those that are going to come online, the 50% of the world that’s still not online yet, and give them a place where they can come with respect.

Andreas Welsch: Fantastic. Well, it was a pleasure learning from you, and more about MyTerms, hearing about the standards, hearing about what we need to make agentic commerce real. A different aspect of just saying that agents can transact on your behalf, but how do we reconcile this and mirror what we have in the physical world. And as always, I enjoy talking to you so much and always learn something new. So, Nitin, thank you so much for your time.

Nitin Badjatia: Yeah, thanks. Thank you for having me on, and looking forward to continuing the conversation.

Andreas Welsch: Absolutely. So, folks, thank you so much for joining, and I’ll see you next time for another episode of What’s the Buzz. Bye-bye.

The customer becomes the first party to a transaction once agents act on a person’s behalf. Badjatia said a business that receives an agent wants one answer. Does the agent operate within the fiduciary constructs of the person who sent it? The agent also needs contract capabilities. Then whatever happened was done with the right set of rights.

IEEE 7012 MyTerms is a standard from IEEE that went live in January, Badjatia said. It is a protocol that takes a contract from legalese into human-readable form. The average non-lawyer can understand it, and machines can execute it. Badjatia compared it to a legal receipt for what was agreed.

A customer who reaches a mutual contractual arrangement is more willing to share relevant context, Badjatia argues. The initiative ponders vendor adoption every day. Larger standard bearers in the industry are endorsing the standard and embedding it in their applications. Badjatia said that gives hope but no guarantee.

The standard proposes five presets, Badjatia said, and it is early days. The basic one, SD base for service delivery, means the parties transact and the business captures no additional data. The negotiation process will evolve. Active development is underway on the interaction buses.

Start with IEEE 7012 or myterms.info. Badjatia recommended downloading IEEE 7012 from the IEEE website and joked that it is good reading for an insomniac. The simpler route is myterms.info, a site for the layperson. Badjatia said the site is agnostic and not promotional. The first working tools are emerging.