Initially, the IT sector seemed slower to respond to inflationary pressures compared to industries such as energy and retail. However, price increases are now becoming apparent in this sector as well. It is understandable that rising personnel and operational costs need to be accounted for. However, out of fear of losing customers, these price hikes in the IT sector appear to be implemented more gradually and cautiously.
A long-standing trend: Rising costs in hosting and domain names
Within the IT sector, there is one specific segment where prices have been rising rapidly for years: hosting and domain names. This trend did not emerge overnight but has been ongoing for quite some time. Significant price increases are evident in both the Netherlands and the rest of Europe.
A key reason behind this is the consolidation of the hosting market. In recent years, many small and large hosting companies have been acquired by American investment firms. Today, nearly every major hosting provider in Europe can be traced back to a handful of U.S. investors. Their approach often follows a recognizable pattern: after an acquisition, there is a brief stabilization period, followed by significant price hikes. Sometimes these increases come in steps of 70-80%, but in some cases, prices have surged by as much as 800% in one go.
Domain names have not been spared either. Both local domains such as .NL and .EU and international extensions like .COM continue to rise in price each year. Notably, the price increases for .NL domains appear to diverge significantly from what SIDN (Stichting Internet Domeinregistratie Nederland), the registry responsible for .NL, actually charges.
Decline in service and technical expertise
In addition to rising prices, a decline in service quality and technical expertise has also been observed. Many Dutch hosting providers were once known for their strong technical knowledge and excellent customer service. However, this reputation seems to be fading following acquisitions. Customers increasingly report a decrease in personalized service, with human support staff being replaced by FAQ pages and chatbots. This shift has led to frustration, particularly among businesses that rely on fast and expert assistance.
The broader impact on Europe’s IT infrastructure
The past five years have brought significant changes to the world. At Exclusive-IT, we, too, have been compelled to adjust our prices for the first time since 2006. Rising supplier costs, higher energy prices, and overall inflation have made this unavoidable.
However, the wave of acquisitions in the hosting industry began a decade ago, leading to immediate or gradual cost increases. Finding alternatives within Europe has become increasingly difficult since most European hosting providers are now under the influence of a few large investment firms.
Historically, the Netherlands has played a crucial role in the development of Europe’s internet infrastructure. Key internet hubs like AMS-IX have significantly contributed to Europe’s digital backbone. Additionally, the country has traditionally offered a wide range of high-quality hosting services, thanks to its strong technical expertise and favorable market conditions.
The future of digital infrastructure in Europe
The growing influence of foreign investors and the associated price increases are putting this strong position under pressure. Without robust European alternatives to American data center operators, it will be challenging to maintain affordability, quality, and independence in our digital infrastructure.
In a society that is increasingly reliant on digital technologies, data centers play a key role. From hosting government and business websites to securely storing corporate data for flexible working, a well-functioning and affordable IT infrastructure is essential. The preservation and strengthening of European data centers and hosting services are not just necessary today but will be even more crucial in the future.