The Dangerous Concentration of Internet Infrastructure Revealed by the Cloudflare Outage

Around 10:20 PM today, I suddenly couldn’t access ChatGPT. All I got was a message saying, ‘Please unblock challenges.cloudflare.com to continue.’ Initially, I thought it was a problem specific to our country, but it turned out to be a massive global internet outage. The cause was a platform failure at Cloudflare.

Cloudflare is a web infrastructure company based in San Francisco, responsible for a significant portion of global internet traffic. As of 2025, it is known that over 20% of websites worldwide use Cloudflare’s services, and this incident highlighted once again the immense impact of its influence. A single company’s server issue simultaneously brought down services like ChatGPT, X (formerly Twitter), Spotify, Amazon, and League of Legends.

OpenAI announced on its official status page, “Some users are experiencing downtime with ChatGPT and the platform website, and we are investigating issues with the API, ChatGPT, and Sora services.” Interestingly, the service disruption was not due to an issue within OpenAI itself but rather a failure of the external infrastructure provider, Cloudflare. This serves as a prime example of the interdependence of modern cloud services.

Cloudflare, in a status update around 7 AM Eastern Time, stated, “We are aware of an issue that may be impacting a large number of customers and are investigating.” About 20 minutes later, they added, “We are seeing signs of service recovery, but customers may continue to experience higher error rates than usual while recovery efforts are ongoing.” Indeed, I was able to access ChatGPT again around 11 PM.

Cloudflare’s Market Dominance and Risks

Since its founding in 2009, Cloudflare has rapidly grown into a giant company with a market capitalization of approximately $28 billion (about 37 trillion won). Since its listing on the New York Stock Exchange in 2019, its stock price has been on a continuous upward trend, with annual revenue reaching about $1.3 billion in 2024. The AI boom and increased demand for cybersecurity have resulted in ‘multibagger’ returns in recent years, drawing significant interest from investors.

The problem is that such market dominance can lead to situations like today’s. Cloudflare provides essential internet infrastructure, including CDN (Content Delivery Network), DDoS protection, and DNS services. Over 30 million websites worldwide use Cloudflare’s services, and it processes over 55 million HTTP requests per second. At this scale, it transcends being a mere ‘service provider’ and becomes ‘the internet infrastructure itself.’

In fact, in September of this year, a Cloudflare server failure temporarily disrupted major AI services like Google’s Gemini and ChatGPT. A similar incident occurring just two months later suggests that this is not a mere coincidence but a structural issue. It indicates that internet infrastructure is excessively concentrated in the hands of a few giant companies.

Comparing it to competitors helps to better understand Cloudflare’s unique position. Amazon Web Services (AWS) leads the cloud computing market with a 32% share, competing with Microsoft Azure (23%) and Google Cloud (11%). In contrast, Cloudflare holds a much more monopolistic position in the CDN and security service sectors. While there are competitors like Akamai and Fastly, few offer as comprehensive and integrated services as Cloudflare.

Infrastructure Dependency and Risks in the AI Era

What stands out in today’s incident is that AI services like ChatGPT and Perplexity were simultaneously affected. OpenAI’s ChatGPT is a global service with over 180 million monthly active users, and Perplexity is a rapidly growing AI search startup. Their reliance on Cloudflare’s infrastructure highlights a new risk factor in the AI era.

AI services demand particularly high availability. Since users interact with these services in real-time, even a few minutes of downtime can critically impact user experience. OpenAI’s annual revenue is estimated to reach $3.4 billion by 2024, and a few hours of service disruption could result in losses amounting to millions of dollars. More importantly, it could lead to a decline in user trust.

In the domestic context, major IT companies like Naver and Kakao have built and operate their own infrastructure. Naver runs its own data centers in Chuncheon and various regions, and Kakao has established independent infrastructure centered around its Ansan data center. However, companies providing global services still heavily rely on overseas infrastructure like AWS and Cloudflare.

Interestingly, Elon Musk’s X (formerly Twitter) was also affected by this outage. After Musk acquired X for $44 billion in 2022, a major restructuring was undertaken, and it seems more reliance was placed on external services to reduce infrastructure costs. This serves as a case illustrating the trade-off between cost efficiency and stability.

In the gaming industry, it was reported that League of Legends was affected, which is particularly serious. Riot Games’ League of Legends is a representative online game with 180 million monthly active users worldwide. Due to the nature of real-time multiplayer games, server downtime immediately impacts millions of users, and ongoing matches can be invalidated.

The fact that services like Amazon and Spotify were also affected is notable. In Amazon’s case, despite operating its own massive cloud infrastructure, AWS, it indicates that some services still utilize Cloudflare. This is a representative example of the complex dependency structure of modern internet services.

Cloudflare’s stock continues to perform strongly in 2025. The increase in traffic due to the AI boom and the expansion of cybersecurity demand are key growth drivers. In the fourth quarter of 2024, it recorded $438 million in revenue, a 32% increase from the same period the previous year, and total revenue for 2025 is expected to exceed $1.7 billion. However, large-scale outages like today could be perceived as a new risk factor by investors.

Personally, I believe this incident has once again highlighted the need for decentralization of internet infrastructure. Although blockchain and distributed system technologies are advancing, they still do not offer practical alternatives. However, if incidents like today recur, companies will have no choice but to seriously consider diversifying their infrastructure. It has reaffirmed the importance of reducing single points of failure for business continuity.

In the future, the responsibility of infrastructure companies like Cloudflare will become even heavier. They are not just service providers but play a crucial role in the global digital economy’s core infrastructure. Stronger backup systems and failure response frameworks will need to be established, and regulatory oversight is likely to intensify. Given that the internet has the nature of a public good, the social responsibility of the companies managing it is growing, as today’s incident has once again demonstrated.

This article was written after reading a Tech article, with added personal opinions and analysis.

Disclaimer: This blog is not a news outlet, and the content is the author’s personal opinion. The responsibility for investment decisions lies with the investor, and no liability is accepted for investment losses based on the content of this article.