The question is: Can we do better? A natural monopoly is a good thing. It just means that the natural monopoly needs to build its own redundancy. Cloudflare total failure isn't common.
I think for the sake of a diverse community and economy, monopolies should be difficult to achieve even naturally.
But for this specific example, a robust technical redundancy doesn't stop CloudFlare from going out of business. A technology company going out of business is pretty much the norm. Incumbents are a relatively new phenomenon for technology (sans some key exceptions), and I don't think CloudFlare is an incumbent. They are an accessory, and your business would probably run without them.
Cloudflare has had network affects from integration with wordpress and cpanel too I believe for some time now.
without cloudflare your site can be taken offline by any random person willing to spend $20 for ddos sellers.
The free plan is a pretty big moat imho, especially if 'half the internet can fail..' - I doubt 10% of those sites would be using cloudflare if there was a monthly fee pushed on them.
Admittedly, my cloudflare usage is only about 30 sites, so my data point is small. The few hosting and design clients I have and their budget constraints are not indicative of 'half the internet' - but I don't believe fortune 500 and SV sites are either.
How so?
On a century scale individual murderers aren't a huge concern to society because they are either dead or infirm by then.