The Internet has experienced one of the most consequent transitions in its history, from worlds dominated by search engines to those increasingly dominated by AI-powered answer engines.
This is an economic earthquake that could erase the business model that has supported the web for decades.
While most tech companies are jumping on the AI bandwagon, one prominent CEO is making alarms and actively suggesting fixes: Matthew Prince of CloudFlare.
“These are no longer search engines, they are answer engines. Economics and rules are very different,” he told me in a recent interview. “We have to sign a new contract.”
problem
A man stands in front of a large screen showing a satellite image of Google Earth. Timothy A. Clary/Getty Images
Over the past 25 years, Google's search engines have generated digital maps and have found the information they need on the web. This generated traffic to support the grand negotiations of the Internet. With this traffic, the site allows Google to copy data to referrals and turn back. Money from advertising and subscriptions was paid for creating more content. This helped Google to show better search results.
In today's age of AI-powered Answer Engines, maps are no longer a product. The answer is that way. Tools like Google's AI Overview and AI Modes, Openai's ChatGPT, and Confusion provide a synthetic response that often eliminates the need to visit the original source of information.
“The answer engine doesn't drive traffic,” Prince said. “Search engines were the engines that drive revenue on the web. Without traffic, existing ecosystems based on current business models will fall apart.”
A sudden drop
The data proves that this is happening. Barclays analysts recently shared a chart this year showing a sharp decline in website introductions and visits to categories such as publishing, e-commerce, travel, fashion, finance, food and beverage.
This is happening while Tech Giants AI bots rub their websites much more frequently, scooping up data for free without permission, and increasing transportation-related costs.
Once the AI summary begins, Google crawls 18 web pages for each user you send to the site. This is up from the 2-1 ratio 10 years ago, according to data compiled by Barclays.
“A year ago, we were about five times more traffic from Google,” Prince said. “It's now ten times more difficult.”
Openai's crawl-to-send ratio is nearly 100 times worse than Google, but humanity is getting worse.
“We're at the turning point,” Prince said.
Why is Prince careful?
CloudFlare CEO Matthew Prince Mike Blake/Reuter
Prince appears to be the only major tech CEO trying to deal with this growing crisis.
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“CloudFlare is the only company that is trying to do anything without giving back about strip mining the web by AI companies. At the same time, it's ignoring the web ignoring what it is.”
There's a reason. Most large technicians and AI companies have incentives to underestimate the value of data on models, chatbots, and related products. They spend billions of dollars on GPUs, data centers and talented researchers. The last thing they want to do is pay for the data as well.
CloudFlare is in a different location. It is an infrastructure, security and software company that helps operate around 20% of the Internet. When the web flourishes, the company works well. The same goes for the opposite.
“This is an existential threat to the Internet,” Prince said. “If the internet business model breaks, that's not good for CloudFlare.”
Controversial moves
Aravind Srinivas, co-founder and CEO of Perplexity Aravind Srinivas
Earlier this year, CloudFlare took a bold step. We created a system that started blocking AI bots by default and encouraged AI companies to pay for websites to access content. Essentially, it turns what was a one-sided relationship from which high-tech companies had their data acquired for free into market transactions.
These moves are debatable. Guillermo Rauch, founder and CEO of AI Startup Vercel, called it “Blocking Progress” this week.
According to CloudFlare, Perplexity, a startup building an AI response engine, has tried to avoid a new digital lockdown. According to Perplexity, CloudFlare is “overblocking,” which undermines user choice and access to innovative services that compete with “established giants.”
“CloudFlare's leadership is either dangerously misinformed to the basics of AI, or simply more talented than the cloud,” he wrote in a spicy blog post.
Lemune CTO Orlovacz said CloudFlare's move to block AI bots by default is not perfect. “I prefer this feature, it's published, and click to opt out?
Google, the passive AI Kingmaker
Google CEO Sundar Pichai Carlos Barrier/Reuters
Still, according to Prince, most tech companies are surprisingly embracing CloudFlare's suggestion to pay for data that will boost AI Answer Engines.
“All AI companies that are long-term thinkers understand that at some point they have to pay for the original content,” the CEO said. “Google is a long-term thinker. Openai wants to bet on which companies still exist in 10 or 20 years. Google is here. Is Openai confused?
Google is at the heart of this crisis and is potentially a solution. As the dominant gatekeeper of the internet, the transition from search engines to AI-powered answers has had a dramatic and chilling effect on web traffic this year.
Nevertheless, Prince remains cautiously optimistic. “I think Google will pay for the content,” he said. “The only question is whether they do it spontaneously or are they forced to do it?”
In any case, Google “understands that something needs to change,” Prince added, but said the company is almost a great power of good in the world.
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In fact, Google said it is exploring and experimenting with a new type of partnership after Bloomberg reported that the internet giant is recruiting news organizations for new licensing projects related to AI.
Business Insider reached out to Google for comment Tuesday. Did not respond. After the story was published, Search Chief Rez Reed published a blog that states that the organic click volume from Google's search engine to websites is “relatively stable compared to the previous year.” She also said other data sources that show dramatic reductions in traffic from Google searches are often based on flawed methodologies and are not accurate.
Prince says that the majority of CloudFlare will pay for content as long as there is a level playing field.
“What that means is that as long as Google does it, they do it,” he added. “When Google goes, everyone else will follow.”
Three AI Futures Vision
A mouse was created by peering into a hole in Swiss cheese. Peter Finch/Stone/Getty Images
The tech industry is currently addressing these questions. According to Prince, the future could unfold in three ways.
1. Content collapse: No sustainable business models appear, the original content dies down and the web becomes a wasteland of AI slops generated by robots and drones.
2. Oligarchiic control: All content creators work for a small number of high-tech giants. Like the Renaissance Medices, these companies become the sole patrons of knowledge, dominating what is created, what is distributed, whom they are. “There are conservative US AI, liberal AI, Chinese AI, and perhaps Indian AI. Europe will try, but perhaps just use liberal US AI,” Prince said.
3. Swiss cheese model: A more hopeful future where AI companies compensate creators to fill the gaps in their vast knowledge base. “Large AI companies have raked huge amounts of data all over. Today, it is the best approximation of human knowledge. Think of it as a huge block of Swiss cheese,” Prince explained. “If we can create a new business model that rewards creators to fill this cheese hole, that's a huge outcome.”
Spotify> BuzzFeed
Spotify CEO Daniel Ek Reuters
Prince is inspired by Spotify's business model. Streaming giants often share user-generated demand signals, and independent musicians create content to meet this. The system generates billions of dollars for its creators and supports the continuous production of high-quality original works.
There is a possibility that AI content economics will advance. Creators are paid to provide not only high-profile headlines but also custom answers to fill the gaps in the AI knowledge universe.
According to Prince, this is better than the digital world that Google accidentally created.
“On one level, everything that's wrong in the world is Google's fault,” the CEO said. “Google has taught us to worship Facebook, Tiktok and the God of Transport, which produces the entire black hole of caution we've fallen into.”
Prince recalls talking to a Buzzfeed executive who explained how online publishers could run A/B tests on various headlines to grasp what generated the biggest cortisol responses for readers.
“That's a bad thing. We don't need it, and journalists don't like writing things like this, said Prince, who owns a local newspaper in Park City, Utah.
There was no need to tell him in the interview. (I'm telling you now, Matthew).
“What if instead you create a new business model that encourages creators to fill in knowledge gaps and pay for it,” Prince said. “It's a better world. It's a less violent world that's not infuriated.”
Internally, CloudFlare calls the initiative “Act 4.” This is a new era for the company following the work of security, networking and developer tools.
Prince bets that this next law will define not only the future of the company, but also the internet.
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