How will the Brexit vote to leave the EU affect the UK web hosting industry? In this article, we try to predict the answer to that question.Posted on 24 October 2016 - Hosting
As we continue to tip-toe towards negotiations for the United Kingdom to exit the European Union, it is looking increasingly likely that the landscape of just about every industry is going to look very different over the coming months and years. We’ve written previously about how the web hosting industry craves security, certainty and mundanity, so - all politics aside - the sheer scale of upheaval ahead doesn’t sit particularly easily with the industry mindset.
But what about the practicalities of hosting infrastructure and the potential impact of Brexit on those? Let’s gaze into the Tibus crystal ball and try to envisage the web hosting industry in a post-Brexit landscape.
One knock-on effect of the Brexit vote has been that the value of the pound has plummeted. This time last year a pound was worth $1.54. Before the referendum it was $1.48 and at the time of writing it is $1.22. That is likely to make hosting packages that are billed in sterling a lot more attractive to overseas companies.
For example, for a US firm looking for a dedicated server in Europe, that £100 per month fee is suddenly costing $122 per month instead of $148 per month.
It remains to be seen whether the drop in price compensates for the fact that the server in question would now be outside the EU. For some companies, this will be a deal-breaker. Others might like the idea of claiming UK data sovereignty, particularly when so many companies choose to use the UK legal system for their lawsuits.
For our customers who have large customer bases in overseas markets, we always recommend having a server in or close to that market for a variety of reasons that are detailed in this blog post. For example, our clients Cruise Ireland maintain hosting space in Germany to maximise exposure to and improve site performance for their large German clientele. The cost of such arrangements looks set to go up. Indeed, the falling pound has already resulted in extra expenditure in this regard.
Similarly, businesses who host abroad via one of the bargain basement overseas web hosts, their UK-based resellers and the major international cloud hosting companies might find their web hosting package goes up in price.
Update: No sooner had we written this article than Microsoft announced 22% price increases for buying cloud services using the pound, effectively citing Brexit as the reason.
As web hosts, our customers are other businesses and organisations. As such, how our industry fares is directly linked to the fortunes of our customers. If Brexit causes a slow-down in other markets, web hosting will surely follow.
One of the key selling points of the Leave campaign was freedom from the bureaucracy of ‘Brussels’. Data protection is just one of the many areas in which this is highly unlikely to come into fruition.
The EU General Data Protection Regulation (GDPR), which strengthens individuals’ data protection rights and regulates the export of personal data to countries outside the EU, comes into effect in May 2018. Even if Brexit is finalised by then, the UK government is likely to adopt very similar legislation in order to make trading and sharing of data with European governments, businesses and individuals workable.
Should the UK government push for even stricter data protection laws than those contained in the GDPR and require that all UK data be kept on UK soil, that would bring its own set of issues. A recent VMWare survey found that the majority of UK organisations are uncertain where their data is stored and only 10 per cent said they were in a position to bring that data back to the UK if required to do so.
In that scenario, UK web hosting firms, such as Tibus, would be able to offer greater reassurance of data being hosting in the UK than some of the major international cloud hosting firms. Indeed, customers who choose to host in our Belfast and London data centres already know exactly where their data is held.