Artificial intelligence (AI) is now widely used to facilitate social interaction, but its impact on social relationships and communication is not well understood. We study the social consequences of one of the most pervasive AI applications: algorithmic response suggestions ("smart replies"). Two randomized experiments (n = 1036) provide evidence that a commercially-deployed AI changes how people interact with and perceive one another in pro-social and anti-social ways. We find that using algorithmic responses increases communication efficiency, use of positive emotional language, and positive evaluations by communication partners. However, consistent with common assumptions about the negative implications of AI, people are evaluated more negatively if they are suspected to be using algorithmic responses. Thus, even though AI can increase communication efficiency and improve interpersonal perceptions, it risks changing users' language production and continues to be viewed negatively.