Cloudflare (NET) CEO Matthew Prince went on The Verge’s Decoder on September 26 and described a plan to default all of Cloudflare’s free customers to blocking Alphabet (GOOGL) from using their pages for AI training, starting September 15.
The version that launched on September 15 is narrower. Cloudflare’s new “Disallow AI Training” setting is part of the recommended preset for new ad-supported sites. Googlebot can keep crawling for Search, while publishers use Google-Extended to opt their content out of training future Gemini models and certain Gemini grounding uses. The question for Alphabet shareholders is what that control costs if sites use it.
Prince’s threat: a hole in Google’s tree
“The sentence that I say that gets everyone at Google to yell at me is, ‘everything wrong with the world today is Google’s fault,'” Prince said on Decoder, adding right away: “That is not fair to Google.” His complaint is the attention economy that search set off (“Google begets Facebook, which begets TikTok”).
His leverage is scale. Prince puts Cloudflare at “20-plus percent of the internet,” and search ranking maps how sites link to each other. “If that just disappears, that’s in a giant hole in the middle of the tree. It doesn’t just break it for this, it breaks it for everything.”
In July, Cloudflare planned to block Googlebot outright on sites that refuse training. It dropped that plan on September 15, once Google qualified as what Cloudflare calls an “Accountable” crawler.
Alphabet’s infrastructure bill is already huge
Alphabet’s capital expenditure climbed from $24.64 billion in 2021 to $91.45 billion in 2025, a 3.7x increase, with 74% growth in 2025 alone. That’s equal to 71% of 2025 operating income, spent mostly on the servers, data centers and networking that run Search, Cloud and AI.
Margins haven’t flinched. Alphabet’s EBIT margin hit 32.03% in 2025, up from 26.46% in 2022, and operating income rose from $74.84 billion to $129.04 billion. On about $403 billion of 2025 revenue, each percentage point of margin is worth roughly $4 billion.
Why the Google bill stays small
The preset applies only to new ad-supported sites, existing customers are migrated based on their previous settings, and any owner can switch it off. Where Google does want data, it can license it. Prince argues that Reddit (RDDT) beats The New York Times (NYT) on money per token “by at least seven, or by some measures, 14.” Reuters reported Reddit’s Google deal at about $60 million a year, or 0.05% of Alphabet’s 2025 operating income. Google could sign 67 deals that size before giving up a single point of margin.
That’s a rounding error.
What it’s worth for GOOGL stock
Alphabet stock trades at 25.07x forward earnings. That’s slightly above its three-year average of 23.15x and well below the 32.97x peak from May 2026.
That valuation doesn’t suggest investors are assigning a major standalone penalty to higher data-access costs, and I think that’s reasonable. If enough sites use the setting, Google may have to license more of the training data it wants, and at Reddit’s reported price that bill would be small against $129 billion of 2025 operating income.
The real risk is access, not money. If a large share of Cloudflare’s sites switch training off, Google loses permission to use more fresh web content for future Gemini training and certain grounding uses. No single licensing deal replaces that breadth. Watch for Cloudflare disclosing how many sites choose “Disallow AI Training,” and whether Google signs more Reddit-style deals.
Want to see how fast Alphabet’s capex is outrunning its profits, or where its forward multiple sits against its own history? Pull up the same charts on TIKR for free, and follow GOOGL, NET and RDDT as the story develops. Learn more here.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
