Author Archives: Kevin Ohashi


About Kevin Ohashi

Kevin Ohashi is the geek-in-charge at Review Signal. He is passionate about making data meaningful for consumers. Kevin is based in Washington, DC.

cloudways by digital ocean logo

Analyzing Digital Ocean’s First Major Move with Cloudways

Disclaimer: I own/have owned shares of $DOCN (Digital Ocean). All opinions and analysis aren't financial advice. I attempt to be as impartial as possible, but disclosing the financial relationship is important for transparency.

Cloudways [Reviews] announced their first price increases since 2017 today on their blog, which will take effect April 1, 2023. This is interesting because it's the first major move since Cloudways was acquired by Digital Ocean [Reviews] in August 2022 for a whopping $350 million.

There is a very nice looking chart which shows you all the price changes by cloud provider.

cloudways pricing chart

Cloudways pricing change chart

The chart/tool is very easy to understand and clearly shows users the price increases. I appreciate clarity, transparency and notice about the price increase.

The increase did strike my curiosity though. How were the price increases distributed by cloud provider since Cloudways suddenly has a vested interest in Digital Ocean's success. There are so few publicly traded web hosting companies; so I enjoy analyzing the few there are. Digital Ocean may be the only meaningful publicly traded company in the US (sorry Rackspace, things don't look good looking on the financials and the recent hack doesn't help) that focuses solely on web hosting (Amazon, Google, Microsoft, GoDaddy all compete in multiple spaces beyond hosting). I used to enjoy analyzing Endurance International Group (EIG - currently, Newfold Digital) when their financials were released as they were a pure web hosting play but were taken private a few years ago. Today, I get to analyze Digital Ocean's first move with Cloudways and then look later to see how it actually played out when financials are released. Without further ado...

I spent longer than I care to admit creating the following spreadsheet. I wanted to know how much the providers charge, how much is being charged now for the instance and how much it's going up by in absolute and percentage terms.

The results were inline with what I expected. Digital Ocean, especially at the lower tiers, is getting an incredibly favorable deal versus its competitors.

If we look at 2GB ram instances across providers we would see the following:

cloudways pricing 2gb

2GB Pricing Comparison

What's interesting is that Digital Ocean seems to have had the best deal before the price increases by a significant margin. The 2GB instance is more expensive ($12) at the provider than Linode/Vulture ($10) and is selling cheaper by $1-2 on Cloudways before the price increases. The markup difference is 83% for DO and 130-140% for Vultr and Linode respectively.

After the price increases the difference is even more pronounced with Linode and Vultr ending at the same 180% markup while Digital Ocean is only at 100%.

I became even more curious. Amazon and Google don't seem like the biggest direct competitors to Digital Ocean, they have much higher pricing already. I suspect if you're picking Amazon/Google, you're picking them for the brand already, not the price to performance ratio. Linode and Vultr definitely have been comparable services to Digital Ocean for a long time. How did markups vary between them?

Digital Ocean vs Linode vs Cloudways - New Markup %

At the 2GB level Linode and Vultr were standardized in the price increase, but the differences afterwards are interesting. Linode actually becomes more marked up for the next tier up. Afterwards they all decrease in markup %. It's interesting to note Vultr's markup goes down more than Linode despite starting equally at the 2GB price tier.

Digital Ocean's markup goes negative at the 32GB tier (and the plan itself offers vastly more resources than the publicly listed plan in terms of storage and data transfer). So it's actually cheaper to get a 32GB plan through Cloudways than buying direct at Digital Ocean. That is certainly one way to attract new higher value customers to the platform.


After spending time looking at the data, the price increases would seem to indicate a clear message. Digital Ocean owns Cloudways. It's making itself the most attractive option on the platform, even offering better deals than they offer direct in some cases. That is exactly what I expected after the acquisition, Digital Ocean should be leveraging Cloudways to increase it's value. They would be capturing margin on both the underlying infrastructure provided by Digital Ocean and from the management/services layer offered by Cloudways.

The concern as a consumer would be getting pushed towards certain infrastructure providers by pricing options controlled by the middleman instead of the infrastructure providers themselves. Does this open the door for more widely for competitors to step in and offer management/service layers that are multicloud with less pricing inequality? Are most consumers already price conscious and using Digital Ocean through Cloudways?

As an investor, I would have similar concerns about what it would do for the brand and competition. I thought the acquisition of Cloudways was smart by Digital Ocean (perhaps maybe not the purchase price, but the company itself makes sense to own). It meant for every customer on Cloudways, Digital Ocean would be getting a cut - even from customers using their competitors. That seemed like a great model. If Digital Ocean puts a slight incentive to use them as the infrastructure provider as well, it makes even more sense. I just hope the price point keeps them competitive as an option on the other clouds so they can continue to take a cut of every hosting transaction regardless of the cloud provider versus becoming solely a funnel for Digital Ocean products.

The price increase timing also indicates Digital Ocean, the publicly traded company, which recently went through a round of layoffs, likely needs to become profitable as it recorded a loss last quarter. It has only recorded a profit once, the quarter before last. With rising interest rates and tech stocks collapsing, it probably isn't the best time to be growing by taking on more debt and running at a loss. We've seen a lot of providers raising rates lately using justifications of energy costs, inflation and probably other reasons. It's probably a reasonable time to pull the trigger on the increase given the macroeconomic circumstances.

Cloudways was expected to generate roughly 50 million in revenue in 2022, so adding a 5-10% increase in revenue would be 2.5-5 million on an annual basis or 625k-1.25m on a quarterly basis. Considering Digital Ocean had a loss of 10m last quarter, that could make up over 10% of the shortfall from being profitable. A not insignificant chunk.

I don't know what the math looks like behind the scenes. I am just doing napkin math and using a bit of intuition. I am sure someone calculated and estimated the impact of the price increases and how they were applied. I will be interested to see the earnings each quarter for the next few months to measure the impact. I also wonder if Cloudways revenue will be broken out separately or not. Hosting is often quite an inelastic product, it's a pain to move and change. If someone calculated everything correctly, this could be great at helping Digital Ocean return to profitability in the short to medium term. I look forward to seeing how Digital Ocean performs in the future.

Removing old companies

The following companies were deactivated from Review Signal today:

SoftLayer (acquired by IBM) which ultimately had a 69% rating.

WebFaction (acquired by GoDaddy via Host Europe Group via Paragon Internet) which ultimately had a 73% rating.

WebSynthesis (acquired by WPEngine) which ultimately had a 61% rating.

WiredTree (acquired by LiquidWeb) which ultimately had a 69% rating.

I often keep companies listed for a while after acquisition because people still search for them and there is some historical value. These companies have been acquired a while ago and that value is pretty minimal at this point. Thus, they are being retired off the site and no longer listed.

WordPress & WooCommerce Hosting Performance Benchmarks 2021

This year the benchmarks have a new home.

2021 WordPress and WooCommerce results are published there. The site displays them a lot more nicely than I even could given the restraints of this current site.

In case you forget the domain name I also redirected: (redirecting to WooCommerce results!)

Black Friday/Cyber Monday Web Hosting Deals (2020)

Black Friday and Cyber Monday are upon us. Some hosting companies offer the best deals of the year during this period. Offers are sorted alphabetically by company.


Company Name Promo Code Promotion Discount Promotion Validity
Promotion Restrictions
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50% off Black Friday. 25% Off Until Nov 30.
DreamHost 29% off Shared. 39% off DreamPress Until Dec 1

Reflecting on .ORG sale being blocked

We, the public, just won a battle. But the war for internet governance that actually represents the public interest is far from over. This could be a turning point or a minor blip that the entrenched interests laugh about years from now.

The big news today is that ICANN withheld consent for a change of control of the Public Interest Registry (PIR). This effectively kills the deal where Ethos Capital, a private equity firm being run by ICANN insiders, tried to buy the rights to run .ORG from The Internet Society (ISOC) for 1.135 billion dollars.

First, let's celebrate. The non profit community and the general public just had a small victory at ICANN. I am not sure the last time the public interest was actually well represented in a major ICANN decision where substantial amounts of money was at stake. This is a historic win for the public good and I couldn't be happier about that. With that said, it's time to look at what happened.

What reasons did ICANN cite for its rejection?

The decision to reject lists a multitude of reasons for why the deal shouldn't go through. It only delayed the decision after a letter from the Attorney General of California, Xavier Becerra which unequivocally stated "Given the concerns stated above, and based on the information provided, the .ORG registry and the global Internet community – of which innumerable Californians are a part – are better served if ICANN withholds approval of the proposed sale and transfer of PIR and the .ORG registry to the private equity firm Ethos Capital." (emphasis added)

The primary reasons ICANN gave consideration to according to their statement can be summarized as follows:

  1. For profit ownership vs non-profit ownership of PIR.
  2. PIR being converted from a non profit into a for profit entity.
  3. $360 million of debt being taken on that will need to be serviced
  4. Untested Stewardship Council / Why can't non profit PIR pursue new business interests
  5. ICANN being made responsible for handling disputes

The first three issues are directly addressed in the Becerra letter. I don't think it's a mistake that these are listed first. They are the most easy to understand and see the problem with.

The 4th and 5th issues are a bit trickier to understand. The stewardship council was Ethos Capital's way of trying to placate the non profit community by saying you will have a voice in our decision making. Believing that voice would outweigh the interests of the investors would be a mistake. Let's not mince words, Ethos are here to make money. Trusting a private equity firm to choose between the public good and profit is a trusting a fox to watch the hen house. A terrible mistake, no matter what the fox pleads.

The 5th issue is about dispute handling and public interest commitments. I am not an expert but you can read this very detailed piece by Kathy Kleinman about them. Kathy absolutely rips them apart in a way that only a lawyer, who also used to be the public policy director for PIR and has been involved in ICANN for decades can. Kathy's piece is a masterpiece of critical thinking and evidence showing us why these commitments shouldn't be taken seriously.

In conclusion, ICANN wrote "ICANN's actions are thereby in accordance with ICANN's Articles of Incorporation and Bylaws' public interest mandates, and are also aligned with how the CA-AGO explained his views of the public interest." The California AG saved .org.

What issues did ICANN not address in its rejection?

While it's important to see what the public reasoning for the rejection are, it's also important to take a moment and talk about what wasn't talked about.

The most glaring omission is the event which precipitated this whole saga. "Proposed Renewal of .org Registry Agreement" which sounds innocuous but contained this language, "In alignment with the base registry agreement, the price cap provisions in the current .org agreement, which limited the price of registrations and allowable price increases for registrations, are removed from the .org renewal agreement." That sentence is what got me involved with this entire issue after reading about it on Hacker News. This was one of the largest public comments ICANN ever received as far as I know (only later to be surpassed by the .com renewal public comment which tripled its opposition for the same issue on a different registry). What did the public tell ICANN? No. We are against this. I analyzed the comments and wrote about it in The Case for Regulatory Capture at ICANN. That article was ultimately cited in the Becerra letter because in over 3000 comments, I could only find six (6!) in favor. With many of them having ties to registry operators.

Some might argue that the events are unrelated. Specifically ISOC and Ethos Capital would make those arguments. Whether one could prove they were or were not is another matter, but the removal of price caps opened the door to the opportunity for higher levels of rent seeking. ICANN's latest mantra of 'we are not a price regulator' is inline with the legacy TLD registry operators' interests, which brings us to the second major problem and omission.

The other major issue is ICANN mentions 'supporting the multistakeholder model' but doesn't mention the complete absence of it during this whole process. The registry agreements for .org and now .com were pre-negotiated by ICANN staff, without discussion or input from the stakeholders. They were approved rapidly with no changes despite overwhelming opposition (98%+ in both cases). The .com agreement was passed within a day during a pandemic after being given a staff report which said "The comments about the proposed changes to
the maximum allowable wholesale price for .COM registry services were nearly unanimous in
voicing disagreement or concern though they provided a variety of reasons why they are
against the change."  ICANN doesn't care about the multistakeholder model other than as a token way to try to appear like a responsible steward of the DNS. What kind of multistakeholder model can in good faith take nearly unanimous disagreement and go against it. Regulatory capture is still alive and well at ICANN and ICANN doesn't seem interested in addressing it.

What's next?

What I've been seeing in the lead up to this decision is a public campaign by people affiliated with registries (VeriSign and PIR) and one message (1, 2, 3) they are trying to push is/was giving up control to California AG is dangerous for ICANN in the long run. Let's be clear why it's dangerous: it means real oversight and accountability to ICANN's public charter: "ICANN must operate in a manner consistent with these Bylaws for the benefit of the Internet community as a whole."

ICANN spent years trying to free itself from the US Government and argued it would be a responsible self-governing entity accountable to the multistakeholder process and represent the public interest for the benefit of everyone. It sounds nice, it was an aspirational goal. When you look at the names who lobbied for it in front of Congress - Steve Del Bianco and Jonathan Zuck, they were VeriSign lobbyists. Steve still is. Today, they are the the policy chair of the Commercial and Business Users' constituency and Vice Policy Chair of the At-Large Advisory Committee (ALAC) respectively. Let's pause for a moment and appreciate that two active/former lobbyists for the most profitable registry operator are policy chairs for groups including a group that is supposed to represent the individual internet user. Jonathan Zuck's organization did $363,202 in business with his former organization ACT which is funded by VeriSign in 2018 according to his latest 990 filing.

So let's focus on where this push is coming from and why. A lack of oversight lets corporate interests get pushed without being checked by the public interest. ICANN easily ignores the public interest as we've seen time and time again. It's become a near carte blanche for registry interests.

The California AG asserting authority over ICANN has been the first road block in years. Becerra just announced to the ICANN world that it crossed over a line that has finally brought scrutiny on them. Scrutiny could be very bad for a .com monopoly which is the only reason VeriSign exists and makes up the majority of their value. So expect to see an immense amount of lobbying coming from them. Maybe it looks like a think of the children argument? Maybe it looks like ICANN needs independence? Maybe it will look like something else. But it's coming. VeriSign has billions at stake and I am sure they will make every effort to protect their golden goose.

In Conclusion

We're in uncharted territory at this point. The .ORG scandal was definitely the hill to die on for people who want to see a more accountable ICANN which represents the public interest. The cartoon villain plot of a former CEO advising a company into buying the non profit registry to exploit it for private investors at the expense of the world's do-gooders was perfect. It's a symptom of the capture at ICANN that they thought they could even get away with it.

My hope is that knowing that the California AG has oversight of ICANN will force some serious reconsideration of their behavior and decision making. My fear is that this was a one time egregious violation of the public good and that minor trespasses will go unchecked and we gradually build up to where we were yesterday before this decision.

Thank Yous

I started this journey a year ago from reading a headline and I've connected with a lot of amazing folks who have helped pushed in the direction that led us to today. So as an acknowledgement to them, I wanted to say thank you.

My lawyers and friends who helped review things and advise me, you know who you are.

Kieran McCarthy and Timothy Lee at The Register and Ars Technica respectively for being the first journalists who listened and continued to cover the issue.

Richard Kirkendall, NameCheap's CEO, who has continually pushed these issues and brings attention to it to his large audience of customers.

Nat Cohen and Zak Muscovich at the ICA who have been involved on the issue and were often the first people dissenting in a thoughtful manner who tirelessly participate in the convoluted ICANN process.

George Kirikos who called the private equity play from the very beginning and was banned from the GNSO working groups and voluntarily left ALAC after calling out it's capture and continues to be a voice of reason and outrage in the ICANN community. (Edited: banned from GNSO and left ALAC)

Mitch Stoltz and the EFF for their active and continued effort to #SaveDotOrg.

Everyone else involved in the #SaveDotOrg campaign who helped make this a reality.

You all made a difference today and I couldn't be prouder to have been on the same team.

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Ethics in Web Hosting – HostCamp Presentation

In June, I was the opening speaker for the inaugural HostCamp in Berlin, which was a side event for the larger WordCamp Europe.

My topic presentation and topic was Ethics in WordPress Hosting. It was a topic the event organizer, Jonathan Wold, and I talked about at length. The goal was to start a discussion about ethical issues facing the industry, what sort of behavior and policies people have and how to address them.

The event was by invitation and I cannot discuss what others shared because that was in private. My goal was to convince web hosting company executives that ethics matter, not just for the sake of being ethical. I wanted to show how even perceived unethical behavior could financially harm companies today with social media. So please act properly, it's in your best financial interest. One of the case studies is Digital Ocean which I wrote about and inspired the talk.


ICANN Fails the Internet Community, allows an unlimited non profit tax

I wrote The Case for Regulatory Capture at ICANN last week and published it because I worried ICANN would approve the proposed .ORG contract at their ICANN65 Meeting in Marrakesh which started the same day I published the article. It wasn't passed during the meeting, but last night ICANN announced it signed a new agreement on the .ORG contract.

Quick Background

ICANN, which oversees the domain name system, was in talks with Public Interest Registry (PIR), a non profit owned by The Internet Society (ISOC), about renewing PIR's contract to manage the .ORG domain name registry. The majority of non profit's use the .ORG space to represent themselves online and PIR was given this monopoly by ICANN. PIR doesn't even manage the registry themselves, but outsources (via bid) to Afilias, a registry services provider. PIR's profits all directly go to ISOC. It's a monopoly designed to tax non profits for the benefit of ISOC. ICANN's proposed contract wanted to remove the provision that allowed PIR to increase their prices 10% per year and make it unlimited or uncapped, giving PIR the freedom to charge as much as they want. Non profits, charities, internet users as a whole were nearly universally against this change.

Back to ICANN's Mission

"ICANN's scope is to coordinate the development and implementation of policies: That are developed through a bottom-up consensus-based multistakeholder process and designed to ensure the stable and secure operation of the Internet's unique names systems."

-ICANN bylaws, Mission

Except, that's not what happened. Here's a timeline of what actually happened.

March 18, 2019

ICANN and PIR negotiated a contract behind closed doors and called for comments on a proposed renewal contract.

The public submitted its comments.

June 3, 2019

ICANN staff created a report summarizing the comments and said "ICANN org will consider the public comments received and, in consultation with the ICANN Board of Directors, make a decision regarding the proposed registry agreement."

June 30, 2019

ICANN approves proposed contract with no changes. Only a date was added, Cyrus Namazi got a promotion and someone spelled Jonathon's name wrong (compare).

The 96 page contract is identical from when it was proposed to signed. The multi stakeholders and bottom up process that is supposed to govern ICANN policy? Ignored.

The public outcry was nearly universally against this change. They weren't listened to at all.

Did ICANN's board vote on the proposed contract after being briefed about the public outcry? As of writing, I couldn't find any evidence in ICANN's board activity page. No agenda, no minutes, no resolutions, no briefing material, no preliminary report. Did ICANN staff simply push through this contract without a board vote? Either outcome is deeply disturbing and potentially violates the ICANN bylaws/mission.

ICANN Needs Oversight

ICANN as an organization has failed to live up to its mission. Greg Thomas wrote a response to my original article and while we may differ on some beliefs, his conclusion was,

"By all appearances, it hasn't taken long, in the absence of U.S. Government oversight, for rot to set in at the root. If the community is going to acquiesce to its own dismissal — if corruption is to become normalized at ICANN and in DNS governance — then, perhaps it's time to start looking towards the heavens."

It's hard to say ICANN doesn't appear to be a captured organization. It's abdicated its responsibility to govern, "ICANN must operate in a manner consistent with these Bylaws for the benefit of the Internet community as a whole."

Yesterday, ICANN failed the internet community as a whole. It sold them out and the best reassurance is 'trust us' from the organization they just gave the freedom to tax non profits using .ORG domains as much as they desire.

The foxes are watching the hen house now and ICANN willfully ignored the internet community and made this happen.


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