Hosting Companies: Can They Be Trusted To Police Themselves? | Article about:
As industries mature, you expect to see a certain degree of consolidation. But this can lead to monopolies, with all the problems they bring. Given all of the merger news we've seen recently, is this the challenge now facing the web hosting industry?
Hosting Companies: Can They Be Trusted To Police Themselves? | Recently investment firm GI Partners (http://www.gipartners.com/) made a huge news splash by acquiring controlling interests in two of the Internet's largest dedicated hosting businesses, Everyone’s Internet (http://www.ev1.net/) and The Planet (http://www.theplanet.com/). This is pretty big news by itself, and has already been publicized to death. Not too long after the merger was announced, another announcement from GI Partners confirmed the obvious: ev1 and The Planet were being merged into one unit.
Any time a merger of this magnitude occurs it raises some questions. For starters, what kind of impact will the merger have on already existing clients? How will it affect the industry as a whole? Will the lessening of competition have negative ramifications for prospective hosting clients out there? Many of these questions are at the core of why the U.S. government created anti-trust laws so as to prevent monopolies from dominating commerce and to ensure a healthy competitive environment where only effective businesses would flourish.
I know what you are thinking. What about Microsoft? What about the telcos? Well what about them? Microsoft is now facing stiff competition from the open source movement, as well as from Google on the Internet front. The telcos never had it so bad with free Internet calling which they NEVER foresaw, as well as some deregulation by the U.S. Sooner or later monopolies – at least in the U.S. -- are challenged one way or another by newer, more robust businesses. However, on occasion the lead time a company might receive before it garners any worthwhile competition could supply a pretty significant stranglehold, making it extremely difficult to remedy (see Microsoft).
Why am I discussing monopolies? Surely this doesn’t apply to the recent hosting merger, does it? Well no, not yet. But these things always start somewhere, and a huge merger among two of the most dominant hosting players seems like as logical of a birthplace as anywhere else for the beginnings of a monopoly.
The hosting business has been around almost since the advent of the Internet. No surprise there, since without hosting companies there really would be no Internet – at least not in the shape, form, and fashion we have become accustomed to. Hosting companies in general control how we experience the Internet: how slow or fast pages load, how secure websites are and the data they contain, how secure our transactions across it are – in effect, web hosting companies are in control of the very essence of the Internet. They aren't solely in control, of course, but you can fathom the significant role the hosting industry plays when looking at it from a macro standpoint.
With the news of the recent merger, it made me wonder. Should the web hosting industry be regulated? Should there be a third party organization which sets guidelines that all hosting companies should follow no matter how big or how small they are? By this I mean things like data backup, security measures, support – things that we all take for granted until you need them, and by the time you need them it’s usually too late.
Of course in principle this sounds a lot easier than it actually is. Who would determine the rules and guidelines? How would they be enforced? Would hosting companies actually follow such a governing body? These are all valid questions, but the answers are unclear. Still, those questions should not preclude us from at least considering whether or not such an organization would have merit.
Obviously the impetus of any larger merger is profits first, and usually everything else second. The ev1/planet merger is large enough to have significant impact upon the hosting industry, especially in the dedicated segment which almost always consists of the mid to large size sites. It is safe to assume that the newly combined entity will encompass many large businesses. If a few more of these types of mergers occur we could start to see a much more condensed version of the hosting industry than we are used to.
Remember the old days when there were many search engines to choose from? You could happily choose from Yahoo, Alta Vista, DMOZ, Snap, and many more. Then Google came along and kicked everyone's ass. Many of the search engines are left, but most people now use Google. Many are starting to become concerned that perhaps there is too much power resting with Google since it fields well over half of ALL searches run on the entire planet.
Google's motto is "Don’t be evil" so I guess it's OK that literally millions of businesses live or die depending on Google's search results. Of course, the cat is already out of the bag, and as we all know, trying to correct something that has already transpired is MUCH more difficult than if the problem were addressed prior to its occurring. How about Google scrubbing data that China's citizens see at the behest of the Chinese government? What if Google decides not to show offensive material in its search results, at least in certain countries? Well you no longer have to wonder "What if" because all of the above is already occurring, and it raises serious ethical implications for everyone who uses the Internet.
I believe we are at a crossroads now in the hosting industry. If there was a ideal time to instill some fair and guiding principles for the hosting industry it would be now. That is to say, before several large hosting providers turn into the telcos and power companies.
With that being said, we should not rush headlong into such a worthwhile endeavor. If any kind of regulation were to be done, it would need to be plotted out in detail and in advance so as to avoid the same mistakes that occurred when the government granted all domain control initially to Network Solutions. Network Solutions was given way too much unmitigated power, and was significantly profit driven, and that made for a dangerous combination. Eventually this was ironed out when the government started handing out more contracts for companies to be able to register and manage domains.
While I don’t believe there is only one right way to approach this concept, one good starting point might be putting together a non-profit entity which consists of large and small companies and businesses, and have them build a charter. This entity would have an elected body which would communicate with a similar hosting equivalent body. The group of hosting companies would ensure equal representation so that they would be able to offer a inside perspective into what may or may not be needed in the way of guidelines that hosting companies should follow.
This approach might be a bit utopian in plan and scope but I believe it is a necessary evil, as no industry would actually wish for or want outside input as to how it conducts its business. The only way a concept like this would fly is if on its face it comes across as a fair and equitable scenario in which both the consumer and the industry wins as a whole. Anything less and it would never get off the ground. I also tend to think that if this concept is laid out in such a fashion, it would appeal to the general Internet public and would create enough impetus to push it along.
What I do know is that there are many hosting companies with tons and tons of Better Business Bureau complaints and many businesses laid to rest due to negligent hosting companies which don’t back up their servers, don’t maintain proper security measures, don’t hire competent personnel and on and on – even though their website says they do all of the aforementioned and then some. So who protects the consumer? Right now many just file for refunds through their Visa or American Express merchant.
Certainly there has to be a better and more effective way to ensure these types of complaints and issues do not continue to occur. After all, the customer would only receive their hosting fees back (after much hassle with the credit card company) but what about all of the business, revenues, and data lost? They are never compensated for those things, and in many instances the damages are incalculable.
One other point that should not get lost in all the confusion is that, since there is no way to police existing hosting companies currently, there really is no way to determine who is running a business out of their garage and who is running a legitimate shop. This newly minted organization should focus on the issues that will matter most to the end consumer and in that respect the entire hosting industry should come through it stronger and smarter. It's a win-win scenario. | | | Top 10 web hosting plans: |
