AI will destroy small businesses, Cloudflare CEO warns

Cloudflare CEO Matthew Prince has warned that AI agents could make it harder for small businesses to win customers. He said the shift may deepen market consolidation as companies prepare systems for agent-led transactions.

In Short

• Cloudflare CEO says AI agents could hurt small businesses
• AI agents may increasingly make purchasing decisions for users
• Companies are already preparing platforms for AI-driven interactions

Artificial intelligence is already changing the way people work, shop, and access information. But as AI becomes more capable, some industry leaders are warning that the technology could create new challenges for smaller companies. Cloudflare CEO Matthew Prince recently said he believes AI agents could end up hurting small businesses.

"Imagine you're a small business and you're trying to convince an agent to buy from you. How do you do that? I think it's incredibly hard," Prince said.

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

Why AI agents are different

Prince's concerns stem from the rise of AI agents, which are far more advanced than traditional generative AI chatbots. Unlike current AI systems that mainly answer questions, AI agents can complete tasks autonomously. Users simply assign a task, and the AI selects the necessary tools and carries out the work on its own.

For example, a user could ask an AI agent to find the best-quality mangoes at the lowest price and have them delivered. The agent could search the internet, compare products and prices, make the payment, and arrange delivery without requiring further intervention from the user.

Many AI companies believe that a growing number of online activities will eventually revolve around AI agents.

The fear of growing market concentration

Prince believes this shift could favour larger, well-established companies. If AI agents are responsible for finding products, comparing prices, and making purchases, small businesses may struggle to get noticed. Established brands with stronger online visibility, larger customer bases, and greater resources could gain an even bigger advantage.

"If you can't have new entrants into markets, then you're, over time, going to have just incredible consolidation," Prince said.

Businesses are already preparing for an AI-agent future

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

The company is now allowing clients to deploy AI agents that can interact directly with these platforms.

A future where AI does the clicking

Morgan Stanley sees a future in which clients may 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.

That vision highlights why the debate around AI agents is becoming increasingly important. While the technology promises convenience and automation, critics such as Matthew Prince worry that it could also reshape competition, making it harder for small businesses to attract customers in a world where AI increasingly makes decisions for people.

- Ends