Cloudflare CEO Warns AI Will Destroy Small Businesses

Artificial intelligence is already transforming how people work, shop, and access information. However, as AI gains greater capabilities, some industry leaders warn that this technology could pose new challenges for smaller businesses. Matthew Prince, CEO of Cloudflare, recently stated that, in his view, AI agents could ultimately harm small businesses.

"Imagine you are a small business trying to convince an agent to buy from you. How do you do it? I think it’s incredibly difficult," Prince said.

According to him, if AI agents increasingly make decisions on behalf of consumers, established companies could gain even more power. He warned that this could lead to greater market consolidation over time, making it harder for new businesses to enter the market and compete with larger rivals.

Why AI Agents Are Different

Prince's concerns stem from the rise of AI agents—systems far more advanced than traditional generative AI chatbots. Unlike current systems, which are primarily limited to answering questions, AI agents can perform tasks autonomously. Users simply assign a task, and the AI selects the necessary tools and executes the work on its own.

For example, a user could ask an AI agent to find the highest-quality mangoes at the lowest price and arrange for their delivery. The agent could search the internet, compare products and prices, make the payment, and organise shipping without requiring further user intervention.

Many AI companies believe that, over time, an increasing number of online activities will revolve around AI agents. Fears of growing market concentration

Prince believes this shift could favour large, well-established companies. If AI agents handle product searches, price comparisons, and purchases, small businesses may struggle to get noticed. Established brands—with greater online visibility, broader customer bases, and more resources—could gain an even greater advantage.

"If no new players enter the markets, incredible consolidation will occur over time," Prince noted.

Companies are already preparing for a future dominated by AI agents

The transition may already be underway. Companies are increasingly modifying their systems to accommodate AI agents. Morgan Stanley—a firm that helps corporations, governments, institutions, and individuals raise, manage, and distribute capital—is changing how clients access data and strategic insights through its ShareWorks and Equity Edge platforms.

The company now allows clients to deploy AI agents capable of interacting directly with these platforms.

A future where AI does the clicking

Morgan Stanley envisions a future where clients might no longer need to log into software designed for human users. Instead, AI agents could retrieve information, perform tasks, and execute workflows on their behalf.

This vision highlights why the debate surrounding AI agents is becoming increasingly important. While the technology promises convenience and automation, critics like Matthew Prince warn that it could also transform competitive dynamics, making it harder for small businesses to attract customers in a world where AI makes decisions for people with increasing frequency.