Amid the burgeoning application of AI-enabled services across diverse industries, this study examined how AI-enabled personalization affects customers’ psychology and subsequent behavior. Drawing on social facilitation theory, this research conducted two main experiments (NStudy 1 = 150 and NStudy 2 = 326). The results indicated that AI-enabled personalization enhanced customers’ sense of social presence, fostering customer citizenship behavior (Study 1). In addition, a sense of social presence was found to moderate the relationship between AI-enabled personalization and perceived surveillance (Study 2). Specifically, when customers’ sense of social presence was low, AI-enabled personalization significantly increased customers’ perceived surveillance, reducing customer citizenship behavior. However, this negative effect would disappear when the sense of social presence was at a relatively high level. These findings underscored the dual-edged sword nature of AI-enabled personalization, suggesting that its benefits are contingent upon customers’ level of social presence. Consequently, organizations must carefully navigate implementing AI-driven personalization strategies to optimize positive outcomes while mitigating potential negative impacts on customers’ experiences and perceptions.