I don’t want to be too political on a digital agency site like ours, but it would be irresponsible of me not to mention how Trump tariffs could impact not just hosting costs, but also internet services at large.
However, recent developments suggest that changes in North American energy dynamics could have global repercussions, particularly for businesses relying on web hosting and cloud services. Ontario Premier Doug Ford has threatened to cut off electricity exports to the United States if President Trump’s 25% tariffs on Canadian goods proceed.
Why should Australian businesses care?
About 41% of global cloud infrastructure is hosted in North America. Even if your services are “hosted in Australia,” they often depend on data centers in the U.S. for various functionalities. Ontario’s potential reduction in electricity exports could lead to increased operational costs for these U.S.-based data centers, which will most likely be passed down to customers domestically and internationally.
How Hosting and Cloud Services Are Affected
1. Data Centers Face Higher Operational Costs
Data centers, especially in northern U.S. states, rely on Canadian electricity. A reduction in supply will force these centers to seek more expensive energy alternatives, increasing operational costs. This scenario could lead to higher prices for services provided by major cloud providers.
2. Small Hosting Providers Will Be Hit Harder
Smaller hosting companies with physical servers in affected regions lack the flexibility to absorb increased energy costs. If your business uses a budget hosting provider with US based infrastructure, they may struggle to maintain current budget pricing models.
3. The Push Toward Energy-Efficient Infrastructure
Rising energy costs will accelerate the transition to more energy-efficient practices. Many of the big Cloud hosting providers such as Google, Amazon, and Microsoft are already investing resources into building nuclear power plants specifically to power the computers. For Australian businesses, this could mean new hosting options becoming available in different regions or an industry-wide shift toward greener hosting solutions.
What can you do to protect your business?
If your operations rely on cloud computing or web hosting with US infrastructure, consider the following proactive measures:
- Review your hosting provider’s data center locations: Determine if they have facilities in regions potentially affected by increased energy costs.
- Monitor pricing adjustments: Stay informed about any changes in service costs that could result from increased operational expenses.
- Diversify hosting options: Explore alternative providers in regions with more stable energy costs to mitigate potential risks.
Impacts will be felt on all aspects of life
There are so many services hosted and built out of the major cloud providers such as Netflix, Google Search, Yahoo Mail, Facebook, Instagram, Shopify, Stripe, Robinhood, OpenAI, Tesla Autopilot, NASA, Xbox and PlayStation are just a few of the everyday services hosted on US cloud services.
I would absolutely guarantee that if Canada’s energy tariffs hit US cloud providers, those costs are going to be passed on.
We’re not just talking business expenses now, it’s going to hit everyone’s pockets.
A ripple in America causes a tsunami worldwide
Canada’s potential reduction in electricity exports may initially seem like a regional issue, but it will very quickly influence cloud infrastructure costs worldwide. For Australian businesses, this situation underscores the importance of staying informed about international energy and trade policies, as they can indirectly affect operational costs.
We can take the trends we’ve seen from COVID where companies raised prices due to “logistic issues” but never dropped them once those logistic issues were resolved.
We’ll continue monitoring hosting pricing, data center locations, and emerging trends in energy efficiency. If you’re considering a switch or need advice on optimising your web hosting and cloud costs, get in touch as we can help you navigate these changes before they impact your bottom line.
This is a bit of a tangent from our usual digital marketing and software development news, but I do feel that it is my responsibility to ensure customers are aware of such things beforehand.
