Cloudflare (NYSE:NET) shares moved lower in early trade on Tuesday after the web application security and performance firm was hit by an outage that downed major websites, including social media app X, eCommerce platform Shopify and OpenAI’s AI chatbot ChatGPT.
A Cloudflare spokesperson said the company saw a “spike in unusual traffic” to one of its services at 6.20 am Eastern Time on Tuesday, which caused some of Cloudflare's global network services to experience errors, including widespread HTTP 500 errors.
“We do not yet know the cause of the spike in unusual traffic. We are all hands on deck to make sure all traffic is served without errors,” the spokesperson said.
In an update posted to its website at 9:42am ET, Cloudflare said, “A fix has been implemented and we believe the incident is now resolved. We are continuing to monitor for errors to ensure all services are back to normal.”
According to Fadl Mantash, chief information security officer at Tribe Payments, the outage demonstrates how vulnerable the digital economy has become.
“When a single upstream provider experiences issues, the impact doesn’t stay contained; it cascades across industries, touching everything from social media platforms to e-commerce checkouts and backend payment services,” Mantash said.
He noted that payments are particularly exposed, with a single transaction relying on a chain of cloud platforms, processors, third-party APIs, authentication tools, and card schemes.
“It’s the same pattern we saw during last year’s CrowdStrike incident: the initial issue wasn’t in payments, yet payments were among the most visible casualties,” Mantash said.
“This is exactly why resilience can’t start at the moment of crisis. The payments industry needs to adopt the ‘prepper’ mindset – building modular systems that isolate faults, rehearsing failure scenarios, and ensuring teams know precisely how to respond when something goes down.”