Italy's communications regulatory agency, AGCOM, yesterday announced a 14.2 million euro fine against Cloudflare for refusing to block access to pirate sites on its 1.1.1.1 DNS service. The fine was issued under Italy's Piracy Shield law, which requires internet service providers and DNS resolvers to disable DNS resolution of domain names and routing of traffic to IP addresses identified by copyright holders.

Cloudflare stated it would fight the penalty and threatened to remove all of its servers from Italian cities. The company argued that implementing a filter on its DNS system, which handles approximately 200 billion daily requests, would significantly increase latency and negatively impact DNS resolution for sites not involved in piracy disputes. AGCOM rejected this argument, asserting that the required blocking would not pose a risk.

The Piracy Shield law allows for fines of up to 2 percent of a company's annual turnover. AGCOM stated that the 14.2 million euro fine represents 1 percent of Cloudflare's turnover. The fine stems from a blocking order issued to Cloudflare in February 2025.

DNS, or Domain Name System, acts as the internet's phonebook, translating human-readable domain names (like example.com) into IP addresses that computers use to locate websites. Cloudflare's 1.1.1.1 is a public DNS resolver, offering a faster and more private alternative to the default DNS servers provided by internet service providers.

The conflict highlights the ongoing debate surrounding internet censorship and the role of technology companies in policing online content. The Italian law aims to combat copyright infringement, but critics argue that it could lead to overbroad blocking and potential censorship of legitimate content. The debate also raises questions about the technical feasibility and potential unintended consequences of implementing content filters at the DNS level.

Cloudflare's stance reflects a broader concern among technology companies about the potential for government overreach in regulating the internet. The company has previously resisted similar demands from other countries, arguing that it is not responsible for the content that its users access.

The case also touches upon the complexities of using AI in content moderation. While AI could potentially be used to identify and block infringing content, it is not foolproof and can make mistakes, leading to the blocking of legitimate websites. The use of AI in this context raises concerns about transparency, accountability, and the potential for bias.

The outcome of Cloudflare's challenge to the fine could have significant implications for the future of internet regulation in Italy and beyond. It could set a precedent for how governments can regulate DNS resolvers and other internet infrastructure providers in their efforts to combat online piracy and other illegal activities. The situation remains fluid, with Cloudflare preparing its legal defense and the potential for further action by AGCOM.