Are bots taking over the Internet? I recently sat down with Guy Tytunovich, CEO of our portfolio company CHEQ*, to explore this question and much more. Based in Tel Aviv, CHEQ provides go-to-market security solutions for over 15,000 customers worldwide, helping organizations like Heineken, Lacoste, Audi and easyJet to eliminate bots and fake users, among other things.
Guy shared fascinating insights about working on the front lines to help businesses defend against malicious bots while preparing for the rise of machine customers: AI-driven bots that are reshaping how commerce and interaction happen online. Whether you’re worried about fraudulent traffic or curious about how to adapt to an AI-driven future, this conversation offers a glimpse into the future of our increasingly digital world and advice for how to thrive within it.
Highlighted Excerpts
Lightly edited for ease of reading.
Lior: Can you explain to us what exactly a bot is and why bots have such a bad reputation?
Guy: A bot is a piece of software that tries to mimic human behavior and do actions that a human would typically do online. That being said, not all bots are bad. Not all bots are fully trying to mimic human behavior. Bots have many, many different purposes and types and identities. I’ll give you a quick example. Some bots click on ads. They try to make the publishers or the Googles of the world think that they’re real human beings who are genuinely interested in whatever ad they’re viewing and clicking on it, in some cases (or in most cases) for malicious purposes to waste their competitors’ ad budget or to piss off someone. And so on and so forth.
In some cases, bots are completely benign. They might cause damage, but they don’t intend to. In some cases, they just want to scrape data. In some cases today, with gen AI and everything that goes on, bots are supposed to do activities that you just don’t have time to do or don’t want to do, like order a pair of shoes. We call that “machine customer.”
Bots got a bad rep because I think a lot of global leaders, whether in finance or in politics, have been using them for their own gain to make it seem like they have a following that is bigger than it actually is. Or in some cases, for instance, with the virality algorithms of social media, make it seem like a certain post is more interesting than it actually is to get more coverage for it. So, it’s been brought to mainstream attention by that, mostly by U.S. politics and people like Elon Musk and others.
Lior: That’s interesting... I read somewhere that almost half of Internet traffic is controlled by bots. Can you expand on that?
Guy: Online, there are a ton of different types of users and a ton of different kinds of bots. I’d say that it’s very likely that about half of the Internet traffic before the age of gen AI was indeed bots. It varies in different geos or in different industries. Not 50% of all social media users are bots. In some cases it’s higher than that, in some cases it’s lower than that. We typically see an uptick in bot activity right before some sort of a big news item, whether it’s war-driven or anything geopolitical. Elections, for instance. But it’s fair to assume that until gen AI came in and brought in the machine customers, bots were about 50% of users. I’d say that now, after gen AI and with machine customers, it’s going to be way, way, way more than 50% of Internet traffic.
Lior: Can you tell me a little bit about who’s behind bad bots and what’s their motivation? Like, why are you getting all those bad bots to your website in the first place?
Guy: It really depends on the type of bot and its goal. There are many criminal enterprises out there making money from bots—for example, bots clicking on ads. I'll give you a couple of examples. Let’s say you’re competing with someone, and you want to deplete their ad budget—like their Google ad budget. Since ad systems operate on a bidding model, you could deplete their budget for most of the hour, driving up traffic costs. Then, in the last five minutes of the hour, you bid aggressively, and with no one bidding against you (because their budget is spent), you get the traffic at a much lower cost.
Another example: let’s say you want to build a news website. Generating traffic is difficult, especially if the site is new. Most publishers make money through advertising—either by views or clicks. To make it seem like you have a lot of traffic, you could buy cheap bots or services to flood your website with visits. This way, it appears that your site is active, even though the traffic is fake.
One more example is manipulating public opinion. If you want a post with a particular opinion to get significant visibility, you could build and send bots to like, comment on, and repost the content. This tricks the virality algorithms of social networks into believing the post is relevant and interesting because it appears that many people are engaging with it. I’m oversimplifying, but essentially, that’s how it works. Suddenly, a post no one should have seen is being shown to many real users because the social network’s algorithm was fooled.
There are many different actors behind these activities. Some do it for financial gain, others for geopolitical purposes—like rogue governments trying to manipulate U.S. public opinion—or politicians looking to sway elections. There’s a wide variety of motives behind these operations.
Lior: It sounds like a lot of digital businesses and maybe e-commerce are more susceptible to these bot attacks… What do you think are the industries or sectors that are experiencing bot attacks the most?
Guy: One of the fun things about being the CEO of a company like CHEQ is that every single business is a potential customer—not just across industries, but also in terms of size. It really comes down to traffic. At CHEQ, we have about 15,000 customers worldwide, including 1,000 large enterprises and the rest small- to medium-sized businesses. These range from very small businesses, like plumbers spending $2,000 a month on digital advertising and getting hit by competing plumbers, to some of the largest brands in the world. We work with clients in finance, airlines, car manufacturing, media, and more.
The variation based on industry is there, but what’s more noticeable is the timing—everyone gets hit, but some periods are worse than others. For example, before the U.S. midterm elections a couple of years ago, we saw a 3x increase in fraudulent and fake traffic across almost all social networks. If you were advertising a shampoo during that period, you’d experience three times the fake traffic compared to the previous month.
So, while there are differences by industry, the bigger variations are due to seasonality, political events, geopolitical developments and similar factors.
Lior: If you found my business was advertising shampoo, is that going to make me pay more for my ads or just waste my budget? How is that impacting me?
Guy: All of the above. First, it’s going to make you pay more because it makes it seem like there’s more interest and increased competition for that traffic. So you’re going to pay more per click or per impression. The second thing is that it depletes budget, it wastes your budget and that’s painful. We have customers that are spending $1 billion a year on digital advertising. If 1% of that is hit — and it’s never 1% — it’s massively impactful.
Lior: I know you wanted to chat about gen AI, how could we not? How is gen AI impacting the bots and the type of bots you’re seeing? I could imagine they become more sophisticated or run at a larger scale, but curious to hear your inside perspective.
Guy: First of all, gen AI is a big old hockey stick type of technology. Every cliche has been said about it, it's a bigger industrial revolution than anything we’ve seen before, maybe even bigger than mobile phones, smartphones and more. And we feel it across the board with everything and also with bots. I’ll mention two things. One is platforms like OpenAI’s ChatGPT or Anthropic’s Claude and many others have democratized a lot of things that were more complex and expensive before, like creating bots. You don’t really need to work hard or be a web developer or anything of that sort to build a bot nowadays or build a bot network. All you need to do is type in a bunch of prompts on ChatGPT and try and mimic that. That is massively impactful. But those are what we call stupid bots. It’s very difficult to build a bot that companies like us wouldn’t be able to identify as a bot versus a human being.
That said, I think the most impactful thing we see with gen AI impacting bot activity is the machine customer. Let’s say that you have a smart refrigerator. Every time you’re running out of milk, the refrigerator would automatically go to the website of the supermarket and buy a new carton of milk. Or let’s say you collect sneakers and there’s a specific model you want, size this, color that. Whenever it’s for sale for less than $200 and it’s on a reputable website, you want to automatically buy that. That’s the machine customer. Every day that goes by, we’re getting closer and closer to it.
Today I saw a banner for something that is AI-related and it said ,”Why hire human beings?” There are a ton of startups that raised a ton of money trying to make a salesperson redundant by replacing it with an agent, an AI, a bot. Forget for a second the impacts on humanity and on the future of work and a lot of good and bad that can happen from it. It’s a completely different world for e-commerce, for any business selling online, because now, suddenly, you have customers that you need to cater to that aren’t human beings. You don’t need to optimize the user experience for them like you would for a human being. The color of the button doesn’t matter, the messaging of the banner doesn’t matter, so on and so forth. Instead, other things do matter and you need to customize your customer journey, the customer experience, so that it fits that of the machine customer, so that the machine customer would be able to more easily detect you as a vendor or as a retailer and want to make an acquisition on your platform. So, I think that’s incredibly impactful.
There’s going to be more and more smart, positive, good bots that are going to make real acquisitions. The retailers out there, or really any business selling anything online, will have to be able to customize the experience for those good bots, to be able to really accurately understand the intent of a user so that they don’t block a good bot, but they do block a bad bot. It’s a completely new world out there. It’s not what we’ve been doing for the last 30 years since the Internet became a thing.
*Denotes a Battery portfolio company. For a full list of all Battery investments, please click here.
The information contained herein is based solely on the opinion of Lior Mallul and Guy Tytunovich and nothing should be construed as investment advice. This material is provided for informational purposes, and it is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to buy an interest in any fund or investment vehicle managed by Battery Ventures or any other Battery entity. The views expressed here are solely those of the author.
The information above may contain projections or other forward-looking statements regarding future events or expectations. Predictions, opinions and other information discussed in this publication are subject to change continually and without notice of any kind and may no longer be true after the date indicated. Battery Ventures assumes no duty to and does not undertake to update forward-looking statements.
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