The Exchanges

Q Zooming out just for a second. What is the state? Uh, how's the internet been for the last few weeks? It's been a busy, uh, month in our last month in geopolitics. I'm sure. And I know that makes your job a bit harder, or at least I would imagine, uh, things get a little bit busier.

A Keeps it interesting. I mean, it's whatever, whatever you see sort of in, in a, in the sort of kinetic side, the physical side of a conflict is, is usually replicated in the, in the cyber, um, side of the conflict. And so, um, you know, we, as the hostilities, um, ramped up between Israel and Iran, Uh, first of all, we saw very clear signals that, that something was coming ahead of time, which is, it's interesting how there's sort of a digital residue, which shows when, uh, there's going to be, uh, kinetic action, uh, uh, taken. And so, and so we were, we were watching, uh, that, that pretty carefully. Uh, big attacks, um, targeting both, um, Iran. Uh, one of Iran's largest banks was hacked by what looked like a, a group of, um, Israeli, um, hacktivists. Um, the largest cryptocurrency exchange in Iran, uh, was hacked and all its funds were drained. Uh, again, looking like it was either by the Israelis or Israeli, um, sympathetic, uh, attackers. Iran has, has tried to do the same thing against, uh, against Israel. Israel's, um, cyber, uh, defenses are much stronger. Um, but we're starting to see that Iran is targeting other, um, uh, uh, other largely U.S., Uh, financial services firms, uh, critical infrastructure firms, uh, to try and see, to sort of try and strike back from what, what is, um, you know, how, how do they strike back against the US in a way that, um, that, that is…

AI assessment note: “whatever you see sort of in, in a, in the sort of kinetic side”

Q internet structure or the incentive structure. Uh, but, uh, it's a reaction, but it's also an action that should reshape the, the, uh, the, the relationship between different parties on the internet. Uh, are there different moments in the history of Cloudflare or the history of the internet that you think, ah, we could draw on as historical analogies, um, to learn from to see how this might play out?

A You know, I think that, um, you know, that Google really, uh, 30 years ago defined what was the business model for the web, which was, uh, you, you create content, search drives traffic, and then you monetize that content through advertising or, or subscriptions or, or ego, um, and ego and monetization, not quite the right thing, but you drive value from it. In one of those, those three ways. Um, and that, that's held up for the last 30 years. I, I, I think that this is, um, the first time that I've, I've seen something where I thought, well, there, there are really going to be, um, very, very, very fundamental changes to the structure of how the Internet works if we move from a search-driven model to an AI-driven model. And, And I think that, um, what I hope is that we can actually make this something where, um, what gets rewarded is not what gets rewarded today, which, which largely is, you know, who can write the headline that produces the most, um, you know, uh, sort of inflammatory response, uh, in, in all of us, you know, who, who basically drives the most cortisol, uh, you know, gets the most clicks and, and therefore the most ad revenue or the most subscriptions. That's, that's not a, that's not a healthy way of looking at the world. I think, you know, the alternative is if you imagine that kind of all of the AI models together are a good kind of assemblage of an approx…

AI assessment note: “Google really, uh, 30 years ago defined what was the business model for the web”

Q have it all be driven by, uh, the, like kind of the same volume, uh, uh, like the volume algorithm that you see on, on, uh, on YouTube or Spotify. Uh, does that seem like kind of what the longterm, um, outcome might look like, or do we need to also get to some sort of like ad driven marketplace? Because that's ultimately where YouTube, how YouTube prices these things.

A Yeah, you know, I, I think it's going to be, um, I, I think that we, there's, there's a lot that we still have to figure out. I, I, I, last week, um, traveled up to Stockholm to meet with Daniel Ek, the, uh, the founder of, of Spotify. And, and it was, you know, it was really, um, it was, it was interesting. He said, you know, that the ultimate model that Spotify settled on, uh, and I think it's, I don't want to put words in his mouth, but, but it was basically like, it was, it was sort of the most naive of all of the different options. That he had come up with and it is works as it is a pool of funds and then they divide it up based on basically how many minutes of, of content you, you consume and there are different rates for music versus podcasts versus audio books. And, um, and it was fascinating to see. So you could imagine a version where Cloudflare effectively negotiates on behalf of all of the content that sits behind us with the big AI companies. People can opt in or opt out. Of being a part of that pool, the more content that's part of that, the more valuable it is to the AI companies, and then we would look at how we could split that up across how much crawling is actually done across that. I think one of the real keys will be, how can we give hints to the AI companies on what is the content which is the most valuable to them? So for instance, if Taylor Swift release…

AI assessment note: “the ultimate model that Spotify settled on... you could imagine a version where Cloudflare effectively negotiates”

Q did the hard work to get the scoop. They should get 90% of the value and 10% should go to the repurposed rage bait version as opposed to the economic model now, which is maybe you get 90% more clicks on the, on the viral, you know, repurposed content and the scooper actually gets 10%. Do you think that's possible or how do you think that investigative journalism will evolve?

A Yeah, this, I don't know if this is an answer to your question, but, but it, but it's, um, Yeah, I thought it was, I thought it was interesting. I, as I said, I met with Daniel Ak, um, up in, in Stockholm, and, um, and he told me, he said, you know, we were talking about this, and he said, you know, one of the things we do at Spotify is we actually surface all of the different queries that are sent to Spotify that we don't feel like we have a really good response for. Um, so if somebody searches for, you know, I want to, uh, uh, a song to a reggae kind of beat, With, and it's all about how much it sucks when your sister steals your car and your dog. Um, like.

AI assessment note: “I don't know if this is an answer to your question”