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00:00You handle roughly 20% of the websites that are out there on the internet, but you're now quite
00:05concerned about the evolution of the internet, and especially the business model that's been
00:10kind of underlying the internet so far. Tell us about your concerns. Sure, I guess my technology
00:15fails, so I'm going with it. I don't get to meet Donna today. So, you know, this really started
00:23about three years ago when we started getting calls from media companies that said, there's
00:31a new threat. And usually when customers call us and say there's a new threat, it's because
00:34there's a new nation state actor, there's a new botnet, there's a new vulnerability that's
00:39online. So I said, what's the threat? And media company after media company after media company
00:44kept saying, it's AI. And I have to confess that I rolled my eyes and was like, ah, media
00:52companies. They're such Luddites. They're always worried about kind of the next technology.
00:59But they asked us, they said, just pull the data. Just look at what has changed in our
01:04business. And so we did. We have very reliable data going back 10 plus years that shows what
01:10is happening. We looked at Google as a litmus test. And the business model of Google is they
01:16provide a search engine, obviously. When you do a search on Google, it provides you back
01:2010 links. The search is not over at that point. Your job is then to follow that treasure map,
01:25go out across the rest of the internet, find whatever it was that you were looking for.
01:29And the way that Google works is they make a copy of all of the internet, all the content,
01:34and then in exchange for the right to make that copy, they then send traffic back, which
01:38then media companies can monetize through subscriptions or advertising or other ways. And 10 years ago,
01:46for every two pages that Google scraped, they sent you one visitor. Over that period of time,
01:52Google has transformed, and we've all watched it, where they've gone from being a search engine,
01:56where they give you 10 blue links, to being something closer to what I would call an answer
01:59engine, where we've all seen at the top of a Google result now, there's an AI overview that kind of
02:04gives you results. If you search for when was Cloudflare founded, it will tell you right there on the
02:08page. You don't have to click on anything else. It's a zero-click search. That's the transition from search
02:13engines to answer engines. And at that same time, what Google has transitioned to is instead of it
02:19being two pages scraped to one visitor, now it's 19 to one. So it's gotten almost 10 times harder
02:25to be a publisher, a media company today. And that's the good news. If you look at ChatGPT,
02:31it's 1,500 to one. They take 1,500 pages for every one visitor they send you. If you look at Anthropic,
02:37it's 40,000 to one. And the problem is that if we don't have incentives for media companies to
02:44generate content, or content creators to generate content, they're going to stop generating content.
02:48But it doesn't stop with that. As we shift to answer engines, it's going to impact almost all
02:54of our businesses. In a world of agentic commerce, what's a brand? What does that mean? Right now,
03:01that's a shortcut for humans to be able to judge quality. What does it mean for an agent that's out
03:06there? What happens to every small business in the world? When I want to buy eggs, I say to my agent,
03:11hey, go buy me eggs. They're not going to walk down to the bodega down the street. So I think that this
03:16has profound impacts on what the entire internet is going to be. And what people weren't recognizing
03:22is that this is a shift in the platform of how people consume information. The same way that we went
03:27from the web on your laptop, to social, to mobile. Moving to AI is changing the way that we're going to
03:34consume information. It's going to fundamentally change the business model of the internet.
03:38And as we think about our mission of how do we help build a better internet, it just seemed natural
03:42that we should be thinking about how can we help figure out what that future business model looks
03:47like. I want to ask about a couple of things that you've done to try to address that. But before we get
03:52into that, I wanted to ask the context question. Why is this your fight? I mean, you are not just CEO of
03:58Cloudflare. You are owner of a newspaper in Utah, but I think that's a relatively minor part of it.
04:04I was the editor of my college newspaper. I believe local news is incredibly important. I think that
04:10the work that journalists do is critical and we should support them. I also think there's a lot
04:14that's broken with the media landscape today where Google has trained us to believe that traffic is
04:20a proxy for quality, which it's not. We look at a whole bunch of things that are awful when there's an
04:25accident on the freeway. We stare at it. That's not because we're good people. And traffic doesn't
04:31always mean that it's the thing that is advancing human knowledge. In fact, you look at a BuzzFeed
04:35or a Huffington Post. Their business was writing the most salacious headlines with the cheapest
04:41possible content. That's not good for humanity. And so there's stuff that's broken about our media
04:48world and business model today. It's not that we need to preserve the past,
04:51but we do need to think about the future. Why we're in an interesting position is
04:55because we're kind of in between it. We don't have a dog directly in the fight. We're not an AI
04:59company. We're not a media publisher, but we're this network that sits between them. Eighty percent
05:03of the AI companies are our customers. We have great relationships with them. A huge percentage of the
05:07internet are our customers. And we're like, these two things need each other. They depend on each other.
05:12The fuel that runs these AI engines is original content, which is being generated. And yet at the same time,
05:19there's a market failure where for various reasons, which we can talk about, the AI companies aren't
05:24actually compensating those creators for the content they're creating. And so over time, those content
05:29creators are dying. So if we can play a role in helping facilitate that, I think that's a really
05:34natural role for us. Content creators are struggling with many of these trends. They kind of struggled
05:38with Google at the beginning. They are now struggling with AI engines in particular. So you've tried a couple
05:45of things to kind of help balance the power between some of them. There was content independence day
05:51in July. You talked about that. I mean, you could talk a bit about that, but also right now you're trying
05:56to differentiate between what Google is trying to do in AI and what Google is trying to do in search.
06:02Why is that important? So markets need two things to work. You need demand. And then the conventionally,
06:09we say you need to supply. That's actually not what you need. What you actually need is limited supply.
06:15If you have infinite supply, then there's no market. There's no market for air because there's
06:20plenty of it, unless you're scuba diving. And then there's a market for air. The problem with content
06:25today is that there's infinite supply. Everyone is giving it away for free. So there needs to be some
06:30scarcity in order for a market to exist. And so what we did in cooperation with literally every
06:35publisher from the Associated Press to Ziff Davis was say, we're going to change the rules starting
06:42on July 1st, where if you as an AI company want to get our content, then you need to actually compensate
06:49us for that. And that just seems fair. And the people who object to that say, I object because you're
06:55holding back progress. You're going to slow down AI. And I say, well, if Jensen at Nvidia
07:02charges you for the chips, is he holding back progress? If your AI researchers who you're paying
07:09literally in some cases, billions of dollars to are charging, should we bring back slavery and
07:16conscription? Like this is progress is so important that no one should get paid in this. Of course,
07:21that doesn't make sense. The three things that you need to be an AI company are chips, talent and content.
07:28Chips are going to become commodities over time because there's never been a silicon shortage that
07:32hasn't turned into a glut. The researchers, the problem with the AI researchers, the reason that
07:38there's a shortage is because five years ago, if you were in a university studying AI, you were a weirdo,
07:44right? It was a hot field in the 70s and 80s that then kind of went in the corner and everyone thought
07:49it was dying. That is not the truth anymore. Today, every university student is thinking, how can I get into
07:55that hot AI course? Because they see that it's a successful thing. So we're not going to have a
07:59massive, you know, like glut of AI researchers, but we're certainly not going to have the shortage
08:04that we have today. And so that actually leaves a lot to be able to compensate creators. But the
08:10first step is you have to create scarcity. Google is a different problem. So Google is, I mean,
08:16at some level, the internet owes just an incredible debt to Google. For the last 27 years, Google has
08:25been the patron of the internet. They not only invented search, but then they invented all the
08:29monetization systems with ads and even subscriptions to be able to take traffic and turn it into revenue.
08:36And it aligned with their business model. They wanted more web because that was more things that you had
08:41to navigate and be able to search. And so they really funded a huge amount of the internet. And
08:46as a result, their crawler, the thing that copies the internet down and then creates search, has very
08:53privileged access to all of the internet today. Something that no one else does. Because they're
08:59spreading money to all these websites, they get access to that. Yeah, they get all this access.
09:03And so what Google is doing, which again, I think makes total sense from their perspective,
09:08but is incredibly damaging to the market is Google is saying, we have an absolute God given right
09:16to all of the content in the world, even if we don't pay for it. Because look what we did for the
09:21last 27 years. And they're saying we can take it and use the same crawler we use for search in order
09:28to power our AI systems. And if you want to opt out of one, you have to opt out of both. Now,
09:33if you're a media company, that's incredibly pernicious. Because if you lose search, you're losing
09:38about 20% of your revenue, but it gets even worse. If you block Google's crawler, it blocks their ad
09:43safety team, which means that your advertisements across all of your platforms stop working,
09:49which is just a non-starter. And so left this way, if this is the way that the world exists,
09:56that Google is able to get content and bundle their crawler together where open AI and anthropic
10:03and perplexity, and everyone else will be restricted unless they pay, the problem is that
10:09we then will have effectively handed the game to Google. They get something for free that everyone
10:14has to pay for, and that's not how you have a healthy market. Now, you're here in London,
10:19not just because you're at the Bloomberg Tech Summit, but also because- This, of course,
10:22was my top priority. Of course, of course. But you also wanted to talk with the UK
10:27competition authority for this very issue. You think that London actually has a chance
10:33to be able to take a leadership role in addressing the very issue that you're talking about?
10:36So every regulator in the world is looking at Google right now. And that actually,
10:41there's a big bunch of Google that thinks that the right thing is for them to start paying for
10:45content. But they have a bit of a chicken and egg problem because they don't want to do anything
10:48voluntary because they've got so many different regulators that are looking at them. And so the US and
10:54and Europe are looking at. But the UK has actually been, I think, more thoughtful and a little bit
11:00in front of recognizing what the real challenge is. So the CMA here, the competition authority,
11:06just designated Google as a strategic player in this space. That gives them the ability to then put
11:13regulations in place. And what they're trying to think through is, how do we make sure that the market
11:20for AI is fair, that there's a level playing field. And I think that's actually a really smart
11:24regulation. What we want here is a lot of competition. What we should all be playing for
11:30is hundreds of thousands of AI companies buying content from hundreds of thousands of media
11:36companies, hundreds of thousands or millions of small businesses, and that you have a really vibrant
11:41ecosystem. It is not in anyone's interest for some small set of companies to control what is going
11:48to be the interface for information going forward. And so what the CMA is doing right now, I think,
11:53is incredibly thoughtful. And what we have suggested is that there's a really simple fix,
11:57which is that Google should have to compete for crawl the same way that any other AI company does.
12:03And they can continue to use their existing old school Googlebot to do search crawling. But if they
12:10want to have any AIs, including the AI overview that appears now is bundled in at the top of search,
12:16that they need to use a separate crawler to do that. And that crawler has to start from scratch,
12:21the same way that OpenAI did, the same way that Anthropic did, the same way that any new entrant
12:25does. And that's the only way that you can have a fair market. And I'm really proud that the UK is
12:30taking this role. And what's your take on how they were doing at this point? As you mentioned,
12:35they designated them as effectively a monopoly in this space. Do you have a sense of where they're going to
12:40come down in this area? I don't. But again, we have said that we are happy to be of service in
12:46any way. We've provided them the data that shows that Google has, with their existing crawler,
12:51a unique advantage in the market, which would be very difficult for any other player to be able to
12:57replicate. And I think over the next couple of weeks, there are going to be some very important
13:01conversations. And what's interesting is that if the UK takes a role in this, I think there's an
13:06opportunity that the UK becomes sort of the, and this might not be a very good metaphor here,
13:11but sort of the Delaware of content, where in the United States, Delaware created the laws that were
13:17where everyone registered their company, because the laws were so clear. If the UK stands up and says,
13:22we want the fairest marketplace for content providers, and for new startup AI companies,
13:29I think that's the best way to encourage, don't give the game to the people who won yesterday,
13:34let people compete on the merits. And the best way to do that is to say, you can't leverage the
13:38technical advantages that you had yesterday in order to bootstrap a monopoly in the future.
13:43We talked a bit in preparation about the dynamics between Google and open AI in particular. So
13:49Google is an important model because companies like open AI are also bound by some of the practices of
13:57how they gather information, how they end up feeding into this business model.
14:01Yeah, I mean, but I think it's just, it's simpler than that. It's just a fairness argument.
14:05It can't be, you can't win in a business when you have to pay for something and your competitor doesn't,
14:11where you don't get access, but your competitor does because of some legacy relationships.
14:16If we want to have a thriving AI marketplace, we have to have a fair set of rules. And the way to make
14:21the rules fair is to say that Google has to play by the same as everyone else.
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