ICANN, VeriSign Sued Over Control of .com

World Association of Domain Name Developers, a trade group apparently representing a small group of online businesses, has filed suit (PDF) against ICANN and domain registrar VeriSign, challenging the two organizations’ October settlement deal over VeriSign’s Site Finder service and the ongoing control of the lucrative .com top-level domain.

The lawsuit, filed in San Jose on Monday, claims the settlement between ICANN and VeriSign violates federal antitrust laws, by creating a monopoly on the .net and .com top-level domains. The suit alleges the agreement further fixes the price of registering .com and .net domains far above market rates—with guaranteed price increases for VeriSign at 7 percent per year—and contests VeriSign’s management of the .com domain until 2012, saying that the terms of the agreement effectively grant VeriSign perpetual control of .com through automatic renewals. The complain reads in part, “The proposed 2005 Registry Agreement contravenes competition, the primary purpose for which ICANN was formed, and affirms and grants in perpetuity VeriSign’s monopoly over the .com and .net domain name registration market.”

The 2005 Registry Agreement between ICANN and VeriSign permits VeriSign to retain control over administering the lucrative .com top-level domain (which contains some 35 million registered domains, from each of which VeriSign earns approximately $6 per pear) in exchange for VeriSign agreeing to a formal 90-day review process for any new services VeriSign plans to introduce regarding domain name resolution. In late 2003, VeriSign arbitrarily changed the way its top-level domains resolved invalid addresses, directing so-called “junk traffic” to a Site Finder service from which VeriSign generated revenue. The change broke a number of services, especially antispam technologies, and engendered a howl of protest from the Internet community. VeriSign reluctantly shut down Site Finder, and suing ICANN for preventing it from developing new business opportunities. ICANN countersued, and the 2005 Registry Agreement was intended to settle the dispute.

The World Association of Domain Name Developers is a trade group of online businesses with unspecified membership, associated with targettedtraffic.com, and apparently concerned with online promotion, search engine optimization, affiliate marketing, and pay-per-click programs. Part of the group’s stated purpose is “make sponsors and advertisers more money by educating them to the fact that not all traffic is created equal even though they are likely priced the same.”

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