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I know it sucks to hear, but be careful about being litigious unless losing access to your account is not a problem.

This isn't specific to Cloudflare, always keep in mind those huge tech companies aren't treated as utility and can boot you on a whim.

Is retaliation illegal?

Only in very specific circumstances like Whistleblowing. In general companies are allowed to decide who they do business with or don’t.

They aren’t immune from critique for the practice however.