Can We Really Trust Web Hosting Companies?

I know what you’re thinking. You’re thinking I’m insane. Maybe if you’ve ever searched something remotely close to “web hosting” on Google, you’ve noticed the thousands of different providers. It seems like a free and open market, with a deal to be found. Well, it isn’t.

Ok. Just Short of a Hosting Monopoly

You might be surprised to find out that 6 of the 10 Top Hosting Providers listed on notable websites like cnet.com are owned by one company. If you know the web hosting game, you’ll recognize names like Hostgator, Justhost, Bluehost, iPage, A Small Orange, and fatcow. You might also recognize dreamhost and Hostmonster. Separately they are all medium-sized hosts, but collectively these 50+ brands likely combine into one of the world’s largest hosting providers, if not the largest.

These 50 hosts combine to make up Endurance International Group. Since 1996, the leadership of this company has been buying up hosting companies as they grow, building a portfolio of many of the world’s most famous hosts, and consolidating the hosting market. Check out the list of brands they own, and let us know in the comments if you host with one of their companies.

But What About The Smaller Hosts?

Most (but not all) smaller hosts are resellers, meaning that they already buy from Endurance, Godaddy, or a large-scale hosting company. This means that they’re forced to raise prices (more often) above that of these larger hosts in order to compete, and that they don’t have direct control over their servers. If they go down, they have no control over when things go back up. This also means that they’re at the mercy of the big players. If Endurance decides to raise the price of Hosting by 10 cents per month, these providers will be forced to do the same in order to maintain their margins. Any hosting companies that try to expand beyond these small reselling gigs is bought out by Endurance, or a competitor.

What’s the Big Deal?

Comparisons can be made between Endurance International group and Standard Oil. Standard Oil, of course, created the Rockefeller dynasty, making John D Rockefeller the world’s richest man, and the first billionaire. A monopoly on oil allowed the Rockefellers, and their cohorts to make incredible margins on oil as automobiles came into prominence. It was considered so dominant, that in 1911 the United States Supreme court ordered it to be broken up, in order to allow for competition.

Hosting has become more affordable in recent years, but it hasn’t gotten close to where costs should be, because these larger hosting companies discreetly control the market. There’s no more competition in the hosting industry, which means the customer loses 90% of the time. There’s no incentive to improve customer service, features, or speed, because there’s no longer any reason to compete on pricing.

…That Being Said

Full Disclosure: That being said, I host with one of their brands, Hostgator. Despite my distaste at the principle of this discreet mammoth company, I’m very happy with them, and it makes me question my own theory. While the pricing is still higher than I’d like, they so outperform the industry in customer support, that it makes me question how much of a role this lack of competition actually plays. Still, Hostgator was acquired only a year ago, so whether they can still maintain their independent flair is something to be closely watched.

Do You Host with one of their brands? Check below (Source: Wikipedia)